It is recommended that personal finances be kept separate from work finances. This is one of the key premises that you must be clear about from the beginning if you have a project that is about to consolidate or a company that has just been born and you want it to succeed.
Among the most important reasons why SMEs fail is poor management, at 29%. It is one of the factors that has the most weight to affect the financial health of a company.
5 reasons to separate personal and business finances
That is why you must keep in mind the reasons why you need to have separate finances, so that you can generate habits that allow you to achieve optimal management of your business, so that in the future you do not have a negative cash flow and you can put financing for SMEs to good use, something that you will probably require sooner or later.
Analyze and reflect on these reasons why you need to define the personal and business financial terrain well:
1. Have order and clarity about income and expenses
Keeping the types of finances separate allows you to know how much money your business really has, and have a realistic perspective about the direction to take, because otherwise, if your personal expenses are taken from your venture, you will not understand if the business is being profitable or not.
2. Facilitate accounting
Another thing that affects mixing personal expenses with those of your business, is in accounting, because when it comes to doing it, it will be difficult to know how the resources were used. Similarly, if you inject personal capital, it can be difficult to trace its origin, and that is counterproductive. It is best that you prepare a financial plan with these fields separated and with very clear reports.
3. Manage negative balances properly
Speaking of not putting personal funds into the company, it’s crucial to figure out where the negative balances come from and see whether the enterprise can cover them with an objective budget that suggests making optimal use of the available resources or with financial support.
4. Promote the growth of the project
If you carelessly use the resources of your company for your personal expenses, you will not only negatively affect the accounting and financial health of the business, but you will be delaying its potential growth. Establish your salary, without it being something out of balance, and keep constantly analyzing the sales, expenses and margins of your venture.
5. Keep your private finances well
Be clear that in order to increase the liquidity of your company there are financial products such as credits, loans and financing, such as the Merchant Cash Advance.
Do not affect your personal capital to grow your project, as that can affect your lifestyle, better benefit from financing focused on the business field and keep your private resources separate from your business.
Complement your plan with financing for SMEs
With the clear reasons, and understanding that this brings benefits for your business, is when you are ready to request financing and manage it correctly, using it only for what your company needs, in order to make it grow.
It is then that Pymes Capital appears, with its option of cash advances, so that you have immediate liquidity in your business, and you can pay with a percentage of the sales you achieve, achieving a flexible and very simple process.
Make Pymes Capital part of your well-structured financial plan, just fill out the online form and in a short time you will have a resolution so that you can boost your project as soon as possible.