As an entrepreneur, separating your business finance from your personal finance is something you should take serious. here you will find out how you can do that.
Starting a business is something everyone who has a financial goal should think of. Running a business gives you all that freedom to spend time with your family and friends. To say a few, that feeling of CEO is always there to back you up. But that's not all that matter.
Most importantly, for your business to live up to expectation, it requires enough capital to pilot the affairs of the business. It's necessary, that from the inception of your business, you take the right steps in preserving the business fund.
Thus, separating your personal fund from that of your business finance is necessary. This will help reduce the temptation of using business funds for personal needs. Thereby keeping the business retarded.
Also, aside from making adequate provision for business expansion, the tax payment is another reason you should consider separating your personal fund from the business fund. This will ultimately protect your personal assets from liability.
If separating your business fund from the personal fund is what you wish to do, I will quickly show you 6 steps you can take to achieve that.
Without wasting time, let proceed to explain ways you can separate your business fund from person funds.
- Register Your Business
Once your business is registered with the Corporate Affairs Commission, it means your business is totally different from you. And as such, will require a separate bank account.
This method is a very good way to separate your business finance from personal fund.
But before this can be achieved, you need to first determine the kind of legal structure to give to your business. There are three categories of business structures with the Corporate Affairs Commission; a sole proprietorship, corporation, Limited liability company.
2) Open a Corporate Account
Opening a bank account for your business is very easy. All you need do is walk into any bank of your choice and get started with the process.
It’s important to note that, the account will have to bear your personal name. But you can designate it as your business account. If you want an account that will bear your business name, then, you have to register the business with CAC.
In case your business is registered, then you will need the following document to open the account; a Valid ID, Your business certificate of Incorporation and a Tax Identification Number (TIN).
3) Keep Your Business Financial Records
Keeping a record of your business finance is another method. Your income and expenditure should be properly tracked.
Keeping an accurate financial track of all your cash and expenses will greatly simplify things and makes it easier to manage your business finances.
4) Pay Yourself
Just like other employees of your business, you pay them on a monthly base. You also work for the business; you are entitled to get paid. By paying yourself from the business profit, it will help keep funds in your personal wallet and prevent the temptation of using your business fund for your personal needs.
Similarly, following this method, will make you feel as if you are working with for an employer and as such make you minimize excessive spending.