One of the main mistakes that entrepreneurs make is mixing their money with that of the business. Do you know what other financial disasters we usually fall into? Avoid them!
When we talk about finance for entrepreneurs, there is never a shortage of topics such as budgets, debt, or cash flow. But what happens in the meantime with the personal finances of someone who becomes their own boss?
It is a sensitive matter, since there is no lack of cases of those who not only ended up failing in business, but also losing their assets. What are the tips to take care of the financial circumstance of the business without neglecting your own?
How to go from earning money to achieving financial freedom and building wealth? What common mistakes should we avoid? If you complete all the items on this checklist, you will be on the right path, and you will be able to sleep peacefully after each working day.
1) Set a salary for yourself from the start
Living for a while from your savings, asking for support from your family, or waiting until the profit starts is a mistake. Your duties in the company must always be rewarded so that the personal costs are met, and you stay motivated.
2) Manage separate accounts
Another very common mistake that novice entrepreneurs fall into is mixing their personal expenses with those of the company. For example, paying for the gas in your car or family weekend meals with your corporate credit card. That is not only inconvenient; it is a dishonest practice.
3) Determine what your personal cash flow should be
Just like you do with the company’s budget, determine in advance what your income and expenses will be in the month and in the year. With what money will you be able to count not only for regular payments but for some unforeseen emergencies.
4) Comply with your personal tax payment
Whether you have a salary, or earn profit income, it is essential that you are up to date with your annual declarations and the fulfillment of any requirement by the tax authority.
5) Take care of your history with the Credit Bureau
This is a registry of users of loans and services, in order to better manage the risk of banks and other institutions. As a business owner, it is imperative that your score is impeccable, especially if you are going to apply for some type of personal or mortgage loan or a new credit card.
6) Don’t put your personal assets at risk
If the business is in dire need of a capital injection, it is best not to involve your personal capital. It is very risky, for example, to mortgage a house or apartment as collateral for a bank loan to start or grow a business.
7) Lean on accounting software
To ensure that you keep your personal and business accounts separate, use an efficient system from the beginning that allows you to keep track of business income, expenses, billing, and payments in a simple, easy, and orderly way.