Want to do a better job managing business and personal finances?
Take these steps:
Step 1
Separate your business and personal finances.
- Separate your accounts and records, and use tools designed to manage your business finances.
- Use bank accounts created for small businesses, like checking accounts, debit or credit cards, savings and money market accounts (MMA), and loans or lines of credit.
- Get insurance for your business needs, like liability, workers compensation, key person coverage, and cyberfraud.
Step 2
Pay yourself consistently and create lasting value.
- Anticipate business cash shortfalls, and plan for how to cover them.
- Use advisors like your CPA, attorney, banker, or business coach to determine the best mix of owner compensation, distribution of profits, business real estate ownership, and retirement plan contributions to meet your personal financial goals.
- If your business could be a saleable asset, build its value to get closer to your financial goals.
Step 3
Protect your personal finances.
- Manage your dependence on your business with secondary sources of income or family working outside the business.
- Diversify you investment portfolio to avoid risk from concentration, especially in the same industry as your business.
- Create a succession plan for your business once you’ve stepped back or moved on.
- Use a financial planner to help you evaluate your business and personal finances holistically, so you’ll have what you need while working—and when you retire.