4 ways small business owners can manage personal finance
Your personal savings are often in danger, if you have started up. We don’t want to scare you but your business is definitely your first priority and the lines between personal and business finances must have blurred.
It’s time to stop and re-examine your own financial status as a founder. First, do not neglect your personal savings. Two, understand that the whole point of starting a business is to earn money, so you need to keep that money. A few tips might help.
# 1. Keep a personal budget
If you are using a great accounting software, you are most likely sorted in your company’s expenses, revenues and cash flow. You must have had a grip of how much you need in order to keep your business afloat. Of course, there will be times when your business will run out of money, so you will need planning. Similarly, you need a personal budget. Unless absolutely required, do not use the money from your personal budget for your business expenses. You can keep your personal and business budget in separate columns through a good accounting software. As for managing your business finances, do check out these simple tips.
# 2. Distinct bank accounts
One of the best ways to keep personal and business finances separately is to have a personal savings and a business current account. You can easily link both these accounts to your accounting software, so it won’t be a hassle. Some accounting software like Giddh make the linking so smooth that you don’t even need to log in to your bank accounts separately, you can simply log in to the software to see both.
# 3. Automate bill payments
A lot of times your business expenses will create a hole in your bill payments. Set up autopay option in your accounting software so you don’t have to worry about any non-payment while the bills would get paid when they are due. This would also make your conscious of keeping enough cash in your personal account for the bills. By simply using some smart automation features from a good accounting software, you can prevent yourself from wasting money.
# 4. Hire an accountant who knows online accounting
In India, typically accountants would be wary of using cloud-based accounting, though things are starting to change now. Yet, look for an accounting intern who is comfortable with using accounting software. Use a software such as Giddh with a learning curve of two days. When the intern manages both your business and personal accounting, you would be able to view and access without much knowledge of accounting. This is a great way to keep both kinds of finances in check.
Why should you keep these separately? That’s because when investors see a blurred line between personal and business finance, they tend to underestimate your managerial ability. They need an assurance that you will always have a logical back-up for business finances without ever using your personal income.
For any help with accounting, let us know.
