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Personal Vs. Business Finances

Lesson 7 from: Cashflow Basics

Dominique Broadway

Personal Vs. Business Finances

Lesson 7 from: Cashflow Basics

Dominique Broadway

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Lesson Info

7. Personal Vs. Business Finances

Lesson Info

Personal Vs. Business Finances

So since we're talking about cash flow, we have to talk about probably a big elephant in the room, the merging of business and personal finances. It is literally the most probably common thing that I see entrepreneurs do, especially when they first get started. I know I did when I first when I first started my business as well, using my business account to pay my personal things and personal account to pay the business things. And that can truly make the bookkeeping situation in cash flow um issue even worse, Right? Because it's really hard to see was this a business expense? Was this a personal expense? So if this is something that you're still doing, I think this is a great time to start separating your business and personal finances, okay, separating your business or personal finance is actually very easy to do. So all you need to do is open a business checking account, right? Or business savings account, but ideally a business checking account and then obviously you probably alread...

y have your business. I'm sorry your personal checking account okay with these two accounts and this is just a bare bones kind of starting point to separate all of your business income that comes in. We'll go into your business checking account or your business account. Okay From there you will determine how much you need to pay yourself To run your own personal finances. So from your business personal account you may say I'm going to pay myself $1,000 a month That $1,000 a month is going to go from your business account to your personal account. And this can happen just be a transfer. Or you can even set yourself up on a payroll. Right? Um I know I like the payroll system Gusteau, it's very simple to use only a few bucks a month. Or you can always talk to your bookkeeper A. C. P. A. C. What works best for you and then once you're person wants the money from your business account goes to your personal account. Your in your personal account is where you pay for personal things, your personal bill, your rent, your car, note, your student loans, whatever it may be. And then in your business account you're only paying for business related expenses. That's it. That's literally the first step. You need to take two separate your business and personal finances. This is going to be very helpful as you start running these financial reports running, um, reports to determine your profits for the month, your losses for the month, your cash flow. Okay? Because it's very hard to determine what your cash flow is. If you're completely co mingling adding money in adding money out, it makes the books a mess. So if you want to say, hey today I'm going to start separating the business personal finances. That is all you need to do to get started