Personal vs. business financial control: reasons not to mix them

You have an idea to make money, decide to bet on it and, for that, invest in a business of its own. The problem begins when investment becomes frequent, which is a sign that personal financial control is interfering with corporate financial control. This can happen to self-employed professionals, such as doctors, dentists, lawyers, salespeople, who have a variable flow of income and spending per month. However, this interference can lead to you losing control of your own money, which puts your business and your investments at serious risk.

Follow today’s post and understand why company money doesn’t mix with home money!

Financial Control: Spending

Financial Control: Spending

One of the most common administrative failures that drives companies to close early is the loss of control over spending. Joint accounts show false values ​​about the company’s financial balance, and both personal budget and business budget are compromised due to lack of data accuracy.

In addition to not having information about cost and billing, the business owner may have a false impression of having money to pay home bills when currently using a money from the company that will be missed in the future.

Teryo Alvaro, founding partner of GuildBayment, gives some tips:

Trace a realistic projection. A very common mistake, says Teryo, is to make an optimistic projection for income over the coming months, such as using the average of the past three months. “I suggest using the media but then reducing it by 20%. This makes you always look good and have the resort to overdraft, ”suggests Teryo.

Find out what is personal spending and what is spent from the company. A second common mistake is not separating accounting, or taking company money for personal matters, and then not putting it back. “Knowing how much you really spend personally and how much your professional activity is really important,” explains Teryo. “The tip is to have separate accounts to control one thing and another. The GuideBayment is very good for controlling your personal account. To control the professional account, we recommend GreenAccount, “he says. Review Your Expenses.Once you have separated all your accounts, you will be able to gauge how much you can actually professionally withdraw for use in your personal life. You will often find that you are less than you thought and then you have three options: 1) Reduce your professional spending,

Investing In Your Business

business loan

When the company has a different checking account than the business owner, a pre-labore can be defined, which works as a salary for the business owner. With a fixed amount to be transferred from the business account to the personal account periodically, profit becomes a potential investment.

The value of the pre-labore may vary to suit the needs of the business owner, and any remaining profit value of the business may be reinvested. In order for the enterprise to grow, profits must be reversed into satisfactory payments to employees, investments in areas needing improvement, and unexpected costs, not pre-labor.

Creativity Exercise

Creativity Exercise

Anyone who is starting his own business and has some source of investment should be careful not to lose money. In bad situations, the microenterprise must be creative so that the company does not break but pays for itself.

When the business loses its ability to profit, the businessman is already starting to think of solutions to reverse the situation. Thus, the company actually walks alone, and if it breaks down, it can still count on the investment of a physical person.

Up to date with accounting

Up to date with accounting

The Federal Accounting Council (CFC) standard clearly states through the entity’s accounting principle that for accounting purposes the business owner should not mix with ownership.

This mix of accounts can lead to false tax returns, which compromises the quality of public management. An accountant who ensures financial control that violates this principle may be advised by the responsible public agencies.

Tax reduction

When personal and corporate accounts are separated, it is easier to calculate the tax for each because the work of categorizing income and expenses has already been done. In addition, the calculation for individual income tax is quite different from the corporate calculation, so you may be paying extra taxes just because you did not separate personal financial control. of corporate financial control.

Good company image

good company

The company can be better regarded by the market when it has its own account. A simple personalized checkbook with the company logo can enhance your image as it shows professionalism.

Profit management can also improve brand credibility in the marketplace, which can only be done by separating personal from financial. In addition, with the reserve buildup, it is possible to redistribute company profits to employees, which enhances the company’s image.

See how keeping personal and company financial control essential to the success of your business? Have questions about this? Share it here in the comments!