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Separate your personal finances from business


Any expert will tell you that the best thing for healthy finances while you are an entrepreneur is to separate personal finances from business, even more so when it is a family business it costs a lot of work to differentiate responsibilities and especially finances are a bit complicated and you can ask yourself things like: Is it possible to maintain a balance between personal finances and those of the business? How to leave aside informal communication?, among others.

It does not matter if it is just taking off or if it already has a few years in the market trying to give good results. Paying attention to how personal and business finances are managed is critical to starting to grow. According to El Economista, 40% of entrepreneurs fail due to the lack of management in their personal finances and the business as an organization, especially when it comes to family businesses, staying at zeros.

Throughout this article we will tell you about what measures (not only financial) could significantly help your family business grow, remember that it is always difficult to adapt to changes, just take into account that the only purpose is to improve.

The importance of separating personal finance from business

  • Facilitates accounting. When you are a company, startup, business or whatever you want to call it, it is always better to have papers and finances orderly, all well constituted.
  • Protect your personal finances. Having all your assets in one account, regardless of any business, there are always risks that could cause a total loss.
  • If you don’t separate one from the other, business growth declines. As simple as you will not have a fixed or constant point of comparison, due to the variability of finances.
  • It’s professional. It’s like any other job, showing commitment is being professional.
  • You can deduct taxes. When the expenses are recorded and coincide with the line of business or are justifiable, it can be done.
  • Prevents family problems caused by mismanagement.

Starting to separate your personal finances from your business

Many family businesses fail simply because they don’t have a good organization and because they don’t manage the personal finances of the business finances. This is not just a problem for those who do not have advanced notions about finance, this topic should be seen as something that anyone with common sense can apply.

  • Set salaries. Let them be reasonable, consistent and fair. One of the most common mistakes is to believe that salaries are not needed and that any strong expense could be solved by taking money directly from the company, in the long run this leads directly to a significant decompensation in cash flow or in other words and your business will suffer the consequences.
  • Use a business credit card. This will make it easier to translate your accounting and much easier to read if there is an audit involved, it also helps you not to combine business expenses with personal expenses.
  • Hire an accountant, initially when a business is launched finances are simple but as the business grows, so are they. Don’t waste time and make sure you choose the best staff to account for your business finances.
  • Meritocracy at all times. The money that is invested in each person who works with you, regardless of whether it is family or not, must be justified according to their responsibilities, results, among others.

Note: It does not matter if it is a company that starts or if they already have a few years in the market

But that’s not all…

There are other things that must be taken into account, which are not superfluous and that will surely facilitate taking the step towards more orderly finances.

In Mexico, each company that is born is less likely to survive unlike other countries. That is why it is very important to pay attention to sensitive points, for example, something that every company, whether family or not, must have an organization chart as solid as possible and with very well defined tasks, because from here a thousand and one problems can arise, concluding in conflicts difficult to patch and if that were not enough, it also threatens the very existence of the business.

Look for everything in your family business to be in order, from the root…

  • Build or modify your organization chart in a certain way that allows you to have very well determined the particular tasks and by team.
  • It provides a very broad vision to each of the participants to reach a mutual understanding of the responsibilities that each will accept.
  • Give equal importance to situations involving a family member as someone who is employed.
  • Do not provide employment only by commitment, it is better to put in the hands of experts the future of your company that can benefit everyone.

Learn to differentiate between work and family relationships

  • Don’t have two kinds of employees. It is rare that some kind of preferences are not generated, the ideal is that they do not exist, it is not well seen to have a different treatment between employees and employees who are family, discretion plays a very important role. It is better not to be overconfident, it is best to maintain a professional environment first and foremost.
  • Make logical, not emotional, decisions. You have to understand that everything that happens in the office is from the office, the decisions made within the family business should not affect personal relationships in any way.
  • The solution to their problems: create a family council. If there are decisions that need to be made between the whole family and reach a mutual agreement, then it is best to hold voting sessions so that everyone agrees, but also to set individual and group goals.
  • Set schedules. Especially if your right hand is your partner. The healthiest thing is to determine times to work and only work without wandering around on issues that have nothing to do. It also contemplates that after 6:00 (or the departure time) no one will talk about work-related topics.

Having your personal finances and those of your business separated is very helpful, it will make it easier to project in the long term in both areas and you will have a totally transparent results, becoming a reliable company.

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