LEARN HOW TO PAY YOURSELF AS A BUSINESS OWNER

Most people don't differentiate their personal income and business revenues. Lots of things will go wrong if you mix up both.

For example, you would likely struggle financially to cater for your personal needs because you are running the business from your personal income. Business operation is always demanding.

Otherwise, the business would suffer insufficient cash to handle it expenses because you have spent more than you supposed to and tampered with the running of your business.

How Can You Separate Your Personal And Business Finances?

Here Are The Ways To Do It Right

1. Open A Business Bank Account:
Make sure you pay in all income from sales and services you make daily into the business account, NOT YOUR PERSONAL ACCOUNT.

With your business account, you can pay bills, deposit cash, pay staff salaries, collect invoice payments, or buy equipment for your business. All expenses for your business should be paid from the business account, not from your pocket or personal account.

2. Pay Yourself A Salary
Even though you are the business owner, You’re equally working in your business; pay yourself the same way you pay your staff. You should be on the payroll record.

If you are paying your staff with a cheque, write a cheque for yourself. If you are using bank transfer, then transfer your salary to your personal account and attend to all your personal needs from there just as you would have if you were working for somebody.

Remember, once the money runs out, you have to wait patiently for the next salary.

3. Keep Account For When You Use Your Personal Items For Business Purposes.

Note, whenever you use personal money for business purposes, be sure to refund it.

For example, if you are operating bakery service, and you got an emergency order, you have your ingredients at home and maybe the eggs you have left won't be enough. Instead of going out to buy only eggs, you decided to take from the one meant for your household use, please remember to replace it after use.

A very common situation is using your cell phone, you should be able to calculate how much airtime you spend on business calls and data consumption and share it equally. You should not buy airtime from a business account and you use a higher percentage of the airtime to call your aunt or uncle or friends.

Getting these things straight early enough in business saves you from many problems. Although it takes a lot of self-discipline and determination to get it right, most especially if you have done the other way around for many years.

Stop seeing yourself as the business, take care of your personal finances and let your business do the same.

Courtesy of MBE Academy.