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Tips Not to Mix Personal Finances with Those of Your Business

Opening your own business is one of the most successful signs of entrepreneurship.

Having a store, managing a website, purchasing a vehicle with work reasons, confers a great responsibility that, at the same time, generates income greater than a regular salary in a company.

The distance between personal gains and the profits produced by a business start to emerge in this way.

When you are a permanent employee, the money has only one objective: to cover expenses. When part of the profits is left over, they are invested in tastes and personal things. Once you have your own company, things change.

After a few months of having opened a business will be noted that the profits often exceed expenses and that money is reflected in statistics as surplus. Between meeting the needs of the business and covering personal expenses there is a very thin line that not everyone can see.

It seems redundant to say that the money that one gets is from our membership. If this business or such investment produces positive dividends, that money is a profit sample.

Of course it is. But, just as a company produces money, part of that money must be invested in the same company.

In this article we will try to put in context the difference between personal and labor finances. How they affect and how is it possible to cope with them.

 

The life of every businessman

Obviously, those who have their own business do not have a fixed salary. The fortnights, health insurance, benefits, retirement, all those benefits of an employee disappear and you have to find your support for yourself. Said in that way it seems a very chaotic and complicated scenario, but in reality it brings greater benefits than you might think.

Owning a store, managing an estate agent, having your own workshop generates profits. By offering a product to the market, it is sold and the owner of the product receives monetary compensation.

That money is reflected as earnings in the monthly payroll. Part of that money is invested in the raw material and the surplus belongs to the employer.

It seems a very simple equation, but there are many cases of companies that go bankrupt because of poor management of money.

Let’s take an example. The owner of a bookstore acquires a batch of two hundred books from a distributor. The bookseller sells 75% of the books so far this month and his earnings are the total cost for each book.

A good entrepreneur would take control of costs and divide those profits into the money that must be paid to the distributor for the 150 books sold, the payment of salaries, expenses incurred by the local and general services. The surplus, the corresponds to the owner.

Many people do not see it that way and confuse the scenarios. Between personal expenses and business expenses, they merge payments and end in chaos. Personal life and business should never mix. They are two different contexts in which one can damage the stability of the other.

The above ideas lead to weigh some situations, one of them is that, for a business to prosper, it must have a capital at all times. Do you need to buy material, the car has a fault, one of the rented apartments presented a problem in the pipes?

All investment, however large or small, needs economic attention. A business that directs its capital to other objectives such as buying a new car or paying a mortgage, is doomed to its own failure.

 

Conditions that an entrepreneur must put

Every investor is their own boss. It must discipline and organize all the aspects it covers. Money is always a sensitive issue that deserves detailed attention. To guarantee the survival of an investment, it is necessary to feed back to it.

The essential thing in this whole issue is to know how to divide the money that should be invested in the company and the money that should go to the home.

Divided accounts always help in this matter. At the end of the month, when the accounts will be taken of the money received for the work, the profits received by the owner of the company will be checked.

Why not send that money to a personal account? If only one account is used for all expenses, at some point the payments will cross and will cause major problems.

Due to the lack of personnel responsible for payroll or due to lack of knowledge of the statistical area, it is not possible to know how much is spent per month in a business.

This is a very common problem in companies today. This happens, above all, in small companies. You can not take a company from estimates.

The success of a business starts with the correct use of money. If there is no schematic control of dividends, how will it not affect the useful life of the company?

 

A life, a business, many responsibilities

We all know how complicated it is to carry personal finances. So many payments, so many responsibilities, so many things to do that sometimes we do not give in everything that is required of us. That’s why we have to discipline ourselves and organize our finances a little.

The profits acquired through your own company are a symptom of independence and economic stability. Not all manage to find the success of the business through their own investment. It is better to ensure that this is maintained and to seek a favorable state for that project.

That the mortgage and the bills of the house do not mix with the salary of the employees or the money of replacement of raw material. Some loans in 5 minutes and the insurance of employees are equally important to pay.

Having the money divided into separate accounts, getting an administrator, creating an agenda that allows you to organize the bills are simple solutions for such big problems.

It’s time to turn around your business and keep personal finances in order.

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