The Balance of Business and Personal Finances

Like oil and water, your business and personal finances don’t mix. Responsible financial management is crucial to surviving a volatile economy for any company. To keep stable finances, business owners need to be well versed in financial literacy, in their personal and professional lives.

The startup and growth phase

It’s easy to overstretch personal finances to support the startup costs of a business. Trying to compensate for the lack of revenues leads to mismanaging personal finances. Not saving, and borrowing against personal credit, are partly why 30 percent of small businesses fail in their first year.

When your business begins to generate cash flow, the business then supports you. It’s crucial to budget personal and business expenses separately or both will suffer during challenges of downturns in fluctuating markets. The ability to protect your personal assets from business debts and losses should be of the utmost importance for any business owner.

Establish a business credit profile

Putting your business on the map is the first step to separating your finances. As a business owner, you need to apply for an employer identification number (EIN) via the IRS website. The EIN is for tax and credit purposes. Obtaining one allows your business to build a credit profile and maintain a record of business transactions. Until you file your business as a separate legal entity, you are personally liable for all financial business activities.

The advantage to having an established business credit profile is increased borrowing power. Reports show 29 percent of small businesses fail because they run out of money. A strong business credit profile lets you qualify for small business loans with low interest rates, creating the ability to have access to cash without tying up your own working capital.

Finding the balance

So, where do you go from here? Once you’ve legally separated your personal finances from your business expenses, it’s time to open separate accounts. Out of the 65 percent of business owners who use credit cards for business expenses, only 50 percent of the cards are under the small business’ name. Having a business credit card, and using it responsibly, sends positive credit activity to business credit bureaus, and legitimizes your business.

Opening a business credit card is an easy way to draw a clear line between business and personal transactions. Keeping business receipts can be a hassle. Whether you’re buying inventory, advertising, or going to a networking convention for your company, using a small business credit card is a simple way to document these expenses, without much effort.

Business bank accounts

Once your business is ready to start accepting or spending money a business bank account needs to be opened. A checking, savings, and merchant services account are typical business accounts to have. The merchant services account allows you to accept credit and debit card transactions from customers.

Business accounts afford business owners perks standard personal accounts don’t offer. For example:

  • Protection. Business bank accounts offer purchase protection for your customers and ensures that their personal information is secure, while personal accounts offer limited liability protection.
  • Professionalism. According to the IRS, only businesses can deduct business expenses. If the expenses incurred for your business are deducted from your personal bank account, the IRS will have the impression your business is a hobby. If you were to be audited, you will have a difficult time proving your business’ validity.
  • Relationships. As your business grows, having a good relationship with your bank will become increasingly important. The sooner you open the account, the sooner you begin establishing a relationship with the bank, which makes obtaining finances for future business expenses easier.

Managing personal finances

As a business owner, it is easy to lose sight of your personal finances in the day-to-day responsibilities of running a business. However, like a business, your bottom line for your personal finances should be attended to and defined. Are you putting money towards your retirement? Are you adding to your savings with each paycheck? Have you cut out expenses that aren’t adding value to your life? Do you have adequate health or life insurance?

While it seems like a basic concept, many people lose sight of maintaining a positive cash flow, and preparing for the future. Always spend less than you make. Remember some months will be better than others. When revenue doubles or triples create a flexibility account after you:

  1. Pay taxes
  2. Put away for retirement
  3. Set aside for an emergency fund
  4. Pay yourself a salary

Tools to help

It can seem daunting to balance two budgets while managing your business and personal life. A great way to begin getting your finances in order is to make a spreadsheet. Monitor and track your cashflow like you would for your business. This will make it easier to see where you need to cut back, what bills need to be paid, and whether or not you’re spending your money wisely.

If you regularly use personal items, such as your car or phone for business needs, keep track of how much the use costs you. For example, logging gas used on business trips and monitoring your business calls on your personal phone will allow you to claim those activities at the end of the year. Too often, business owners assume responsibility for costs that can easily be written off.

There are many tools available for personal financial management to make things easier if spreadsheets seem too time consuming

  • Mint. A popular free tool helps track expenses, plan your budget, and sends alerts when you’re close to reaching your limit for spending.
  • Shoeboxed. A fast way to digitize and archive receipts in a single, secure location. Turn receipts into verified data, categorized, organized, and searchable anytime, anywhere.
  • SavedPlus. This app is good for people who have trouble saving. It lets you set aside a percentage of each purchase you make. The percentage is then sent into your savings account with a weekly deposit.
  • Level Money. This is a great app that helps you gauge how much money you have to spend each month based on your income level.

Final thoughts

Of course, every business is unique and as a business owner, you should always tailor your focus and budget to what’s right in your situation. Planning ahead and remaining frugal will serve you and your business well in the long run. This provides a clear roadmap to achieving your business and personal goals.





5 Ways SEPA Can Transform Your Business

SEPA, The Single Euro Payment Area, was introduced to facilitate the transfer of Euros throughout the Eurozone. By treating the entire Eurozone as a single domestic market, SEPA has been able to greatly reduce the costs and complexities of transferring money internationally within the Eurozone.

SEPA offers a number of significant advantages to businesses who need to make payments across the Eurozone. Here are five ways that SEPA, via its unification of multiple independent payment systems, has the potential to transform businesses.

Send Money for Less

One of the main advantages of SEPA is that it allows for the Entire Eurozone market to be treated as a single domestic market. Prior to the advent of SEPA, many businesses had to use one system for making payments within their own country and an entirely different system for making international payments. This meant that businesses were at the mercy of whatever payment operators were available in their location. SEPA has changed this dramatically, allowing businesses to avoid the large fees that many of those operators levy on their services.

SEPA is comparatively cheap compared to these older methods. While most financial institutions will charge a fee for making SEPA credit transfers, this fee is much lower than the fees for making international payments under the previous systems. For some businesses, this difference in cost represents the difference between their ability to trade internationally and being forced to stick to the domestic market. For other businesses, the savings that SEPA brings will make a big difference operationally.

Streamline Your Payment Process

Before SEPA, there was a multitude of different payment systems in common use throughout the European continent. This meant that businesses operating over multiple locations would have to account for the different systems. This would be reflected in increased operational costs, such as training staff to use the different systems. The use of different local payment systems and their associated fee structures meant that businesses would need to pay more when moving money between locations.

With SEPA, the same payment process is used across the board, removing the fees that once existed. Using the same payment system everywhere also ensures that company employees will only ever need to familiarise themselves with a single payment system.

Not only do businesses now only need to learn a single payment system, they also only need to know about a single set of rules and regulations. This reduces the administrative burdens and legal costs that used to hamper businesses who wished to make international payments.

Easy to Understand

SEPA is widely regarded as being one of the more elegant payment systems. This is because it is very easy to understand and use. Previously, businesses looking to make international payments throughout the Eurozone were dependent upon a fragmented framework of different payment systems, each of which had their own specific set of applicable rules and regulations. Businesses who were hoping to operate in such a way would need to ensure that they had access to employees with the relevant knowledge.

SEPA isn’t just a unified system; the system is easy to use and understand, which has the potential to dramatically reduce the complexity and costs associated with transferring money internationally. Businesses will no longer have to seek out specialist knowledge for every location they plan on operating in. They know only need to understand SEPA. When you combine this with the ability to make SEPA payments with established providers, such as SEPA Payments with AccessPay, it is a much more efficient and straightforward system than previously existed.

Cost Effective

There are some inevitable costs associated with moving money internationally, but SEPA allows businesses to minimize these costs. Businesses who want a cheap method of sending money from the UK to the Eurozone have welcomed the advent of SEPA, whose fees are tiny compared to the fees that were previously levied for making international payments throughout Europe.

Future Proofing

SEPA is now being expanded so that it is also capable of handling mobile payments, and other emerging payment technologies. It is likely that SEPA will one day also support cryptocurrency payments, particularly if uptake continues to increase. SEPA is, therefore, an obvious choice for businesses who want to stay ahead of the curve when it comes to their payment processing.

SEPA has proven revolutionary for businesses who need to make payments across the Eurozone. By reducing the cost and complexity of international transfers of money, SEPA has been transformative for many businesses.

5 Tips to Help You Get A Big Project Completed on Time

When you are working on a big project, it can be very beneficial to have a strong team around you. Sometimes, making sure this team is working efficiently can be difficult and so projects tend to fall behind schedule. If you have a big project that needs to be completed and a client that you want to impress, you’ll want to avoid this at all cost. Managing your team and understanding how to get a project completed on time can be very important.

If you’d like to know more about how you can reach that important deadline, keep reading our 5 tips below!

Choose the Right Team

If you are having the opportunity to choose the team for your project, make sure to think carefully about this decision. You’ll want to choose people who can really help the project and people with the individual skills that can make a real impact. It is important to choose people that can offer different skills so that they can help at various points throughout the project. There is no point in choosing a few people who all have the same skills as you’ll waste time with them all working on the same thing. That’s not to say that you shouldn’t have more than one person working on an element but often the old saying of “too many cooks spoil the broth” can be true. Choose a team that works effectively together and understand each other’s skills well enough to get a project completed on time. You’ll also want to choose a team that get on well together as any sort of conflict might slow down the process.

Use A Workflow System

When you have chosen your team for the project, you’ll need to make sure that they are working as efficiently as possible. With a big project, there are often individual tasks that need to be worked on by different members of the team. Sometimes, certain team members can spend too long on menial tasks which can slow down the whole process. If you’d like to try to get your big project completed on time, you can use a workflow system to organize your tasks. One way to do this is to use a Kanban board which uses columns and swimlanes to organize different tasks in a project. Kanban boards can be designed to suit your type of project and you can choose how many columns you would like to have in your own personal one. Tasks will move along the board as they get completed. This is also a great way of ensuring that the workload does not get too heavy and that things that are in progress get completed before other tasks get started on. If you’d like to know more about this type of system and learn what a Kanban board is, make sure to take a look online at websites like Kanbanize.

Improve Communication Channels

Having effective communication between your team members is vital in ensuring that a project is completed on time. It is important that all members of the team are sure of what is expected of them and how long they have to do each individual task. If you are the leader of the team then you need to make sure that you are contactable and that you can answer any questions. This is also important for team members being able to talk to each other and help each other out. Communication is key to any project and you must consider how you are going to communicate with your team effectively if you want to make sure that your big project is completed on time.

Communication is not only important between the team itself but communication with the client is also important. Make sure that you understand exactly what is expected of you and check in with the client every now and again. This will help to ensure that the project is completed to the standard that they would like and that you won’t be left with lots of things to fix at the end of it. Improving communication channels on all ends is important to get a project done quickly and effectively.  

Don’t Waste Time on Small Tasks

If you are in charge of your team, it is likely that you will be the person who completes the small daily tasks. Although these may be important, you should be aware that some of these tasks can be automated. Automating tasks like data summaries, timesheets and expense forms can save you a lot of time. If you are able to have these tasks go on in the background, you’ll find that you can spend time on other important parts of the project. All you need to do is find some software that can help you to complete these tasks without having to worry about them. Take a look online and you are sure to find something that suits the type of project that you are completing. Avoid doing manual tasks that are seen as time wasting and you can help your team complete the project on time.

Set Goals and Deadlines

Although your main goal is to get the project completed on time, it is important that you set smaller goals that you’d like to achieve throughout the project. These can be time measured goals that allow you to monitor if you are staying on track. To do this, you should sit down with your team at the beginning of the project to come up with some of the goals together. You can also involve the client on this to make sure that they are happy with what is going on. Having regular meetings to assess where you are with your progress goals can really help to add some focus to the project. Working towards individual deadlines can make the whole project seem more manageable. Make sure to praise your team if they manage to meet the individual goals as this will motivate them to keep trying hard. A motivated team with goals to reach will help you to get your project completed on time and to a great standard.

Final Thoughts

If you are trying to get a big project completed on time, there are many things that you can do. One of the most important things is choosing your team carefully and making sure that they understand their individual roles and responsibilities. Having a happy, motivated team will help you to get your goals set and reached with ease. It is also important that you make the tasks clear and easy to understand. You can easily do this by using some workflow software like a Kanban board to organize the different tasks that need to be done in order to complete the big project that you are working on. Saving time on small manual tasks can be a very effective way of saving time on your entire project. Automate anything that you can to free up your time, giving yourself more freedom to help your team out. Make sure to plan your project carefully and you will be sure to reach your project deadline.