10 tips for separating personal and business finances

Learn how to separate your personal and business finances through this guide!

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Separating personal and business finances is essential to stay organized and avoid problems.

After all, without financial control, it is difficult to make the business grow.

You probably already know this. However, we know that in practice, making this happen is not as simple as it seems. However, it is essential. That's why we're going to help you!

Below, see what to do to separate personal finances from the company:

1. Get organized

The first step is to get organized.

It doesn't matter if we are talking about a personal finance planning or business.

Without organization, nothing will work.

Therefore, before taking any action, start organizing yourself so that it will be easier. separate the personal cash of the business.

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2. Do a good analysis

To help with organization, gather the necessary information about the company's financial issues, income, expenses, among others.

Here, you can start separating your personal finances from your business finances. However, if you prefer, use this section only to group information.

Then, separate it into two categories: personal life and business life (financial part of your business).

A simple way to do this is through Excel spreadsheets.

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3. Set goals and objectives

By separating and identifying personal and business income, you can obtain very concrete data on results.

For this reason, it is now possible to define goals that your business intends to achieve and develop a business plan.

There are simple goals that can be set here, such as increasing sales in the physical store and/or online by X% and reducing expenses by Y%.

What really matters is that you are able to set goals, so that you can identify the steps necessary to achieve them.

As important as creating goals is analyzing them, since most of them involve the financial part.

But, after all, what does this have to do with separating personal finances from the company?

In order to set goals and objectives in an organized way, it is necessary to analyze your account and all movements related to the business.

And if you don't separate the two accounts, it will be very difficult to organize yourself and track your results.

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4. Have separate bank accounts

It may seem obvious, but many entrepreneurs make this mistake.

When using the same bank account for both purposes, the chance of getting confused becomes much greater.

Basically, we are talking about managing and separating your personal bills (water, electricity, condominium) and business commitments.

Without this separation, controlling money inflows and outflows becomes much more complicated.

Therefore, it is ideal that you have separate bank accounts.

The good news is that there are several banks that offer special conditions and fee exemptions for legal accounts.

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5. Update cash flow

There's no way around it: when it comes to finances, control and organization are essential.

To do this, it is important to have a constantly updated cash flow.

It is important to record all cash inflows and outflows, regardless of the amount.

This makes it easier for you to analyze payments made, received and any financial issues you have pending in the coming days and weeks.

6. Create personal and company reservations

Both individuals and legal entities go through moments of financial instability.

To make these moments less difficult, it is essential that you have a emergency fund.

With each withdrawal, keep in mind that a portion must be allocated to creating your personal reserve.

Likewise, part of the cash in hand needs to be invested in a fund, so that the company can deal with unforeseen events or even take advantage of opportunities that arise.

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7. Control all financial transactions

Here many entrepreneurs tend to make mistakes.

To make the job easier, some people only look at the larger transactions and leave out the smaller ones.

Cash flow is excellent for the financial management of your business, but there are several precautions that must be taken to separate personal finances from the company.

In fact, in family businesses, this happens more frequently, as it is relatively common for one of the owners to use the business's operating balance to pay a personal bill.

At first, this may seem like something irrelevant, but when it happens constantly, it can cause problems, disorganization and headaches.

Ideally, you should never pay your personal bills with company money. However, if this happens, make sure everything is clearly stated so that you don't have any problems or doubts later.

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8. Define the value of your remuneration and that of your partners

A common mistake made by entrepreneurs is to withdraw money from the cash register according to personal needs.

However, many people do not realize that if all the profits from the business are going into the partners' pockets, the company is left without a reserve for investments, which harms business growth.

One way to avoid this problem is to define a pro-labore for you and your partners.

Although it is not exactly a salary, it functions as compensation.

In addition to the pro-labore, partners can also establish values for withdrawals based on anticipated profits.

9. Have a financial diagnosis

Financial diagnosis is a solution used to completely map the company's budget.

For businesses, carrying out a financial diagnosis is important to ensure the company's continuity and ensure it grows in a more balanced way.

Only this will allow you to truly have a more general view of all business income and expenses.

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10. Seek professional help

Separating personal finances from business finances is something every entrepreneur needs to do.

However, you don't need to take care of everything yourself. After all, there are some details that require the work of a good accountant and/or a professional financial manager.

Conclusion

Now you know how to separate your personal and business finances.

But as we said, to make this process even more efficient, it is important that you have the help of specialized professionals!

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