Lemons, water, and sugar mix beautifully to create a refreshing beverage on a hot summer day. Noodles, marinara sauce, and meatballs cooked together produce a satisfying meal.
But business and personal finances when mixed together create confusion, disorder, and misrepresentation. These two things should never be mixed. Yet the small or micro business owner can easily find themselves doing just that; mixing business and personal finances. It is critical to follow a few simple steps to get your business and personal finances in order so your business can thrive professionally and you can breathe personally.
- Keep separate business and personal accounts!! This is the single most important step in the process. This makes it easy to create individual business and personal budgets that guide financial affairs.
- Setup accounting or bookkeeping tools for both business and personal accounts. I have found that Quicken works easily for personal finances and it is inexpensive. It replaces the standard checkbook, categorizes spending, and maintains a history for future planning and reconciliation. Quickbooks is the business standard, but requires some professional setup as well as costs more. If your business has employees though, it is a must.
- Prepare for taxes on a regular basis. Save 10% each time you pay yourself so you are always prepared to pay the bill. Uncle Sam is not going away so you might as well prepare for him.
Although satisfying and delivering to your customers is the reason you went into business, money mismanagement could be the reason many owners go out of business. This area is just as critical for your personal life. Many marriages are restored simply by resolving issues related to money. Don’t underestimate the power of this simple principle: tell your money where to go so it doesn’t tell you where it went!
Resolve in 2011 to start on a fresh slate with your money management for both business and personal. That is a great resolution!