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WHEN TO SEPARATE BUSINESS FROM PERSONAL
Opening your own business is just a mixed bag of emotions and often an incredibly hard lesson in reality. Much of what is encompassed during the initial start up phase of a small business is a trial and error process. Every entrepreneur starts out with the best intentions and an overabundance of ambition. A business plan has been crafted and parts have already begun to be implemented. There is a general excitement yet a lofty fear of the unknown. Constant worry about whether you are doing anything right is a daily occurrence.
However, as you begin to grow confident and your business picks up speed, you begin to more clearly see what is necessary to make the business work. No amount of planning can ever fully prepare you for daily life as a sole proprietor. It is an experience you need to live every day and learn from every minute. As a relatively new business owner myself, I thought I could impart some of my own trial and error learning to other new start ups who have concerns all over the map about different aspects of business.
In the beginning, I just couldn’t see how I could ever separate my business from my personal things. As a work at home mom, you can often find me working on the floor next to my young child playing or contemplating the next article topic while making dinner, separating any aspect of my work and business life seemed ridiculous to me. I had concerns about being able to maintain a consistent income, worried about how tax season would play out, and dealing with day to day life of my family. It was a little bit frightening, partly frustrating, and highly thrilling to get started.
As I began to find clients and consistent work, I started to find the confidence I needed to tackle bigger business matters. I became ruthless about income and expense tracking and I slowly began to make sense of what it would take to earn a good living. In the beginning, keeping finances separate was not much of a concern. Any payments I received went directly in to my personal bank account to cover the bills. It was recorded but at that point, it was not divided into any particular category other than income. When things began to pick up and I was making a profit that exceeded my personal expenses, I finally had some money to put back into my business. I opened a paypal account and began to use it for business reasons more than personal but still did not separate the two entirely. Then the end of the year came along. The first year I would be responsible for my own taxes. What a wake up call, sorting through expenses for 12 months and having to double the work because not everything was separated.
Since that time, everything I have related to business is a separate entity from my personal finances, including credit cards, paypal accounts, and bank accounts. While I am still just as responsible for all of the bills, I have at least placed a clearly divided line that will help me sort and account for all things financial. Along the way, I have also come to understand a lot more about what it takes to stay in the game. This was not something I could have learned, or believed, from any other source. If I could sum it up, do not waste precious time worrying about the right and wrong details of your business, pay attention to the daily lessons you are learning in real life and use what you have learned to make things move forward more effectively.
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Tisha Kulak is a writer for Creditorweb.com, where she writes about and responsible credit card use. http://www.creditorweb.com/categories/business-credit-cards.html
