It is inevitable that at time there will be personals, family or other external demands that will tempt or necessitate us to take money from our start up.
What do we do in these situations, how do we help both our business and our family?
A simple solution is to keep separate records, one set for the business and one for self etc. When this is accomplished it is also important to pay yourself a wage or salary. This wage or salary needs to then cater for all external needs and the business must remain separate and segregated.
Besides just keeping separate records we should also have separate accounts for our business money and the wage we receive.
When family approaches us for money it can be very difficult but we need to exercise the discipline not to dip into our business resources. Its good to share but it is not wise to take funds from a business if it will be detrimental to the long term viability of the business.
We may have the short term good feeling for helping out but end up with the long term consequence of a failed or struggling business. Sometimes it is not always the best thing to share.
GoooD
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This article is like talking to me directly, i am presently having difficulties in saying no to dipping my hands in savings that ordinarily come what may i shouldn't. Your post is a wake up call. Thanks a lot.
It can especially be hard when your family isn't doing as well as you are. But just let them know how much more you can help everyone later by making sure your business is safe to grow now.
This post is helpful, thank you
what was your favorite part?
Not to mention the fact that it can be a nightmare during tax time if you don't keep your business and personal finances separate.
Yes!
This is so so true and necessary. I've had friends get into trouble for this. But it's so annoying how some family and friends feel entitled to get things from you.
Without discipline, one would just crash his/her business because of constant stress from people.
You are right
Yes, a lot of people have problems due to not bothering to pay attention to this. Nice to find you. Just followed you.
Thanks.
True, preplanned investments for both for our work and family is really important and in tough times we would not face the situation where we have to disturb the one book of accounts for other. Thanks for sharing this great opinionated post. Wishing you an great day and stay blessed. 🙂
Great comment. I like the idea of "preplanned investments" into each.
Thank you so much. Wishing you an great day and stay blessed. 🙂
I agree that it is really difficult to manage business and personal funds separately. There is such a pull to just put everything together and make sure both sides are ok. But if you do this you cannot accurately tell what is working and what is not. Regarding family, here is a tough issue. Sometimes you have to offer help if you can but you are right, not at the expense of the business. You need to be sure that it is an emergency and that the person has a pant to pay you back that makes sense. Finally you need to be sure you can lose that money because you will not have any recourse if you do not get it back. Thanks.
Balancing your money is the key to having enough
Its always so tough to outright ignore helping especially considering this person at one point or the other has also done something immeasurable for you in the past, and no matter the explanation and reasons you give it just doesnt count or matters to them...You get labelled as selfish, stingy and evil. But as you rightly said business funds should be for business ONLY so as to avoid stories that touch...
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This is so true. being patient through the action of reinvesting is the best way to generate recurring wealth..
Sometimes the emotions kick in. just the other I took this girl out using cash that came from the business and it made me realize that this business thing is perhaps not for everyone, but happens by grace for anyone..
I consider this useful but I tend not to see it work for some certain situations whereby more expenses is needed to be incurred for a better living.. For example hospital bills, furniture or house damages which might need more money than what is at hand for wage paid to yourself.
This strategy will be good for high income or market earners not for the average masses.
When you're first starting out, you should still keep separate bank accounts for business and personal, but it's true that it is more important to pay the rent or fix a busted pipe even if you have to do an unplanned owner's draw from the business account to do it. That's one of the reasons the IRS has sole proprietors file business and personal taxes on the same form. It is understood that such a young business is fluid between business money and life expenses money. But as you grow it becomes more important to keep everything separate all the time. As soon as you get that first employee, you need to protect the business money for the business only or you could get into big problems.
wise info
I have a small startup in here and I couldn't agree more on keeping things separately. My initial 12 months I was surviving on my savings and at the same time pouring some funds back to business. It's after this time and crossing the 1st phase that I decided to take a fixed salary out from business. Needless to say I still don't have a fixed date when I pay myself 😬
It took me 5 years to get to where I could give myself a regular salary! But you're wise to know you can't right now, so not jeopardize the business trying to. It's more important to build success than just act more successful than we yet are. Obvious, but so many people make decisions that reflect their idea of what a successful business is supposed to be doing, rather than what they're really ready for.
Absolutely. Following you for regular updates
Well said.
Lovely audio