One of the biggest mistakes novice entrepreneurs have is not separating personal finance from business finance. This can lead to a chaotic business financial management. Here are some of the obstacles you will face if you combine personal with business finance. Meanwhile, if you also need a bookkeeper, you can hire Irenas Bookkeeping Services in Parramatta.
– You do not know whether you are a profit, or actually just dig a hole cover.
– Money for developing your business can be used for household needs or requested by family members, so your business cannot grow.
– You might not know that you are actually losing money.
– You will have difficulty making loans to banks.
– You cannot sell your business if one day you want to do it.
A. Separate Accounts
Separating personal and business accounts will make a big difference in the process of separating personal and company finances. Especially for tax matters that must contain the profits and losses of your business
Currently, you can open several accounts at the same bank. In terms of administrative costs, of course, this will be more efficient.
However, the number of accounts owned by someone in one bank is also limited. If you have several businesses, maybe you might consider opening an account at a different bank.
Please calculate your needs, and consult the matter of opening this account at the branch office of your favorite bank.
B. Separate Financial Statements
The separation of financial statements allows you to control the company’s financial activities easily. The company’s cash flow in and out is no longer mixed with personal finance.
Basically, the components in personal financial statements and company financial statements are different.
Not everyone is diligent enough to make personal financial reports, but at least if you have a business, you must make financial reports for your business.
In this information age, there are many templates in the form of .xls files or free applications that you can use to create business and personal financial reports.
The main thing in making financial statements is that you must be diligent in recording your financial transactions. If you delay one or more days in recording financial transactions, your company will face problems.