{"id":2886,"date":"2017-10-25T09:00:53","date_gmt":"2017-10-25T13:00:53","guid":{"rendered":"https:\/\/www.sage.com\/en-us\/blog\/?p=2886"},"modified":"2026-02-12T05:35:14","modified_gmt":"2026-02-12T10:35:14","slug":"a-tip-for-entrepreneurs-dont-mix-personal-and-business-finances","status":"publish","type":"post","link":"https:\/\/www.sage.com\/en-us\/blog\/a-tip-for-entrepreneurs-dont-mix-personal-and-business-finances\/","title":{"rendered":"A tip for entrepreneurs – Don\u2019t mix personal and business finances"},"content":{"rendered":"
\n\t
\n\t\t
\n\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\tMoney Matters<\/a>\t\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t
\n\t\t\t\t\t

\n\t\t\t\t\t\tA tip for entrepreneurs – Don\u2019t mix personal and business finances\t\t\t\t\t<\/h1>\n\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t

\n\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\n\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\t

\n\t\t
\n\t\t\t
\n\t
\n\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\n\t\t
\n\t\t\t\n\t\t\t\t\"Nhlakanipho\t\t\t\tNhlakanipho \u201cNhlaks" Zondi<\/span>\n\t\t\t<\/a>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t<\/div>\n<\/div>\n\n\n\n

I have a relative who\u2019s been running a lucrative business for a couple of years now. But, even after years of operating, he still struggles to pay his staff their salaries and wages on time.  While there may be many reasons for this, my guess is that managing small business finances is not his greatest strength. And here\u2019s why:<\/span><\/p>\n\n\n\n

He says it\u2019s because of the nature of the business or industry he\u2019s in; his clients, mainly government departments, never ever settle their invoices<\/a> within their agreed time frames. But, then, he also drives a very fancy car and is grossly generous towards his family and friends. It turns out that his car installment is often paid from the business account, and he has a friend who owes him a large chunk of money, which he had loaned him from the business account. Of course, that would make it difficult for his business to make ends meet. I know a lot of small business owners are plagued with the same issue in that they mix personal and business finances, which hinders business growth.<\/span><\/p>\n\n\n\n

If you\u2019re a sole proprietor or have an informal business, it\u2019s understandable that your business and personal finances are one. If, however, your business is a legal entity on its own, if it\u2019s registered, and if you have people working for you; your business and personal finances must be separated.<\/span><\/p>\n\n\n\n

When I was younger <\/span>I started a business, and killed it<\/span> within two days, because I ate all my stock (it was popcorn). Using your business finances for personal reasons is the same thing; it kills your business instead of helping it run efficiently and grow. Instead of using your profits for personal expenses, re-invest the money back into the business.<\/span><\/p>\n\n\n

\n\tDownload now<\/a>\n<\/div>\n\n\n\n\n

Pay yourself a salary, wage or commission<\/strong><\/h2>\n\n\n\n

To avoid dipping into your business\u2019s accounts, pay yourself bi-weekly or monthly and use that money for your personal expenses. If your salary\/wage or commission doesn\u2019t cover your personal expenses, then adjust your personal expenses, don\u2019t kill your business.<\/span><\/p>\n\n\n\n

I run two side hustles with friends. We all have secure, monthly incomes, so we\u2019ve decided that we won\u2019t get paid just yet. All the money we make (except for this one time we went shopping with our first pay\u2026 bad decision!) is re-invested into the businesses. So, if you can survive without getting paid by the business, do so.<\/span><\/p>\n\n\n\n

Get a business bank account<\/strong><\/h2>\n\n\n\n

Only use the business bank card and account for business transactions. Don\u2019t ever use them for your personal expenses.<\/span><\/p>\n\n\n\n

Keep separate business and personal financial records<\/strong><\/h2>\n\n\n\n

Successful business owners keep daily records and use them to make wise business decisions. Make sure that you keep records for both your personal and business finances. Keeping a record of your personal finances will keep you from funding your personal expenses with your business\u2019s money.<\/span><\/p>\n\n\n\n

Claim from your business<\/strong><\/h2>\n\n\n\n

If you ever use your personal funds for business purposes, keep a record of that and make sure to reimburse yourself from the business\u2019s account.<\/span><\/p>\n\n\n\n

\n\t
\n\t\t
\n\t\t\t
\n\t\t\t\t\t\t\t\t

From cash flow challenge to smart money management<\/h2>\n\n\t\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t

90% of business failures are caused by cash flow problems. Discover how to go from having a cash flow challenge to smart money management.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\tDownload Guide<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\"Tax\t\t\t<\/div>\n<\/div>\n\n\n

\n\t
\n\t\t
\n\t\t\t
\n\t\t\t\t\t\t\t\t

Subscribe to our Sage Advice Newsletter<\/h2>\n\n\t\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t

Get our latest business advice delivered directly to your inbox.<\/p>\n\t\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\tSubscribe<\/a>\n\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\"Working\t\t\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

I have a relative who\u2019s been running a lucrative business for a couple of years now. But, even after years of operating, he still struggles to pay his staff their salaries and wages on time.  While there may be many reasons for this, my guess is that managing small business finances is not his greatest […]<\/p>\n","protected":false},"author":348,"featured_media":2887,"menu_order":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_sage_video":false,"post_featured_image_hide":false,"footnotes":""},"categories":[43,44],"tags":[299,152,155],"business_type":[40],"lilypad":[],"context":[102],"industry":[56,52,58,55,54,59],"persona":[96,95],"imagine_tag":[230],"coauthors":[699],"class_list":["post-2886","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money-matters","category-strategy-legal-operations","tag-cash-flow","tag-starting-a-business","tag-staying-competitive","business_type-small-business","industry-ecommerce","industry-food-beverage","industry-nonprofit","industry-professional-services","industry-retail","industry-travel-hospitality"],"sage_meta":{"region":"en-us","author_name":"Nhlakanipho \u201cNhlaks\" Zondi","featured_image":"https:\/\/www.sage.com\/en-us\/blog\/wp-content\/uploads\/sites\/2\/2017\/10\/soloprenuerworkingathome.jpg","imagine_tags":{"230":"Small business"}},"distributor_meta":false,"distributor_terms":false,"distributor_media":false,"distributor_original_site_name":"Sage Advice US","distributor_original_site_url":"https:\/\/www.sage.com\/en-us\/blog","push-errors":false,"_links":{"self":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/2886","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/users\/348"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/comments?post=2886"}],"version-history":[{"count":0,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/posts\/2886\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/media\/2887"}],"wp:attachment":[{"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/media?parent=2886"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/categories?post=2886"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/tags?post=2886"},{"taxonomy":"business_type","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/business_type?post=2886"},{"taxonomy":"lilypad","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/lilypad?post=2886"},{"taxonomy":"context","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/context?post=2886"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/industry?post=2886"},{"taxonomy":"persona","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/persona?post=2886"},{"taxonomy":"imagine_tag","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/imagine_tag?post=2886"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.sage.com\/en-us\/blog\/api\/wp\/v2\/coauthors?post=2886"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}