Reasons to Keep Personal and Business Finances Separate
Whether you’re just starting a business or you’re a tenured small business owner, you want to ensure your personal finances don’t get entangled in your business finances. By keeping your finances separate, you are helping protect your assets, creating a better picture of your business’s financial health. Below are steps on how to protect your small business.
Choose the correct business entity.
Even though you hope it never happens, a simple business dispute could not only affect your business finances but your personal finances too. You are legally separating your assets by taking steps to form a business entity. There are few entity options to choose from, so where do you start? Read more on our Types of Business Entities blog or visit Business Structures | Internal Revenue Service (irs.gov) to learn more.
Build your team.
Starting or growing a business can be an overwhelming time in your life, so you may want to consider building an all-star team of professionals to help you personally and in your business. You can meet with an attorney to help you navigate forming a business entity, how to protect your business, assist with contract review, succession planning, and more. You can also think about hiring an accounting firm or bookkeeper to guide you through your business growth and your personal finances. They are experts in their field and can help you navigate tricky financial situations.
Appropriate insurance policies for your business are vital to protect your assets. Not only should you have an insurance policy for your business, but you should consider a life insurance policy for yourself and your business partners. Additionally, protect yourself and your personal assets with insurance policies.
When running a business, it’s easy to put yourself last. You are a part of the business and should be paid accordingly. This includes paying yourself regularly and contributing to your retirement!
Get to know your fellow small business owners! They likely have already learned lessons that they can pass on to you. You can check out our Big Advice from Small Business Owners and Small Business Boot Camp blogs to get started.
We want your business to be successful long term. These steps can point you in the right direction, but don’t hesitate to contact your Banker if you have any additional questions.