Separating Business From Your Personal Money

As a business proprietor, during my first few months of doing business, I used to spend the money of the business itself for my personal needs. Over time, I learned that that was a mistake for the following reasons.

1.     You Slow Down Business Growth

First of all, the money intended for the business was for the purchase of new equipment, the development of infrastructures, payrolls and investing in other businesses. Taking money from the business for personal use can slow down the business’ growth.

2.     Corruption

With you having no systematic way of getting money from your business or not even distinguishing different funds for different uses, your business is founded on confusion and corruption. When it does grow in a few years, it will be plagued by these two problems rooted ever since the business began.

3.     Bankruptcy

Eventually, with too much usage of business funds for personal use instead of business growth and expansion, you risk the business growing closer to declaring bankruptcy. Remember, businesses thrive on expanding profits and recovering capital. It doesn’t mean that once you regain your capital, you can use all the profits you get.

4.     Unworkable Business Reputation

I’ve experienced this during the first year of my business when it became expansive (but still a bit slow because I was taking business money for personal use). Most businesses that would like to partner up with you may withdraw their offers because you have an unworkable business reputation. An unsystematic and non-clockwork repertoire is not attractive to investors or possible business relationships.