Growing Your Business - Why Separating Business and Personal Finances is Good

 This article is not all about finances. Well, it's partially about finances. More importantly, it's about how to grow your business. Growing your business doesn't just happen by magic. There's no business growth fairy that takes away a balance sheet and leaves a bigger business under your pillow. It takes a consistent, carefully managed investment to create your own success.

 And that investment starts with something that you might not have considered: Separating your business and personal finances. Surprised? 

Here are the reasons. First, you'll want to separate your business and personal finances for tax purposes. If you keep them combined, you might not be eligible for certain deductions, but if you separate them, you may be entitled to deduct expenses for your home office and mileage allowance. Likewise, you may be responsible for paying certain taxes on your business that do not apply to your personal income. Separating your finances is the only way to ensure that you properly follow all tax laws and receive all advantages to which you are entitled by law. That can grow your business by clarifying your paperwork and possibly making more money available (because of more deductions) which you can reinvest in your business. 

Another important reason for separating your finances is to get a loan or a grant so you can invest in your business. Separating your finances helps to establish a paper trail and helps you to create financial reports that demonstrate the business' performance. If your finances are separated it will be much easier to determine which income and expenses belong to the business itself. 

Third, separating your finances can help you decide how best to grow and develop the business as well. You will be able to see the areas in which the business excels as well as those areas in which it needs some extra help. You can generate targeted, accurate reports and financial statements that show at a glance how the business performs in various areas. 

 How Can I Separate My Business and Personal Finances? 

The easiest way to separate your business and personal finances is to open a business bank account. If you use credit to make business-related purchases, apply for a card in the name of the business. Have all payments made to the business account, and use only those funds and the business credit card to make purchases. 

How Do I Get Paid? 

You have multiple options for paying yourself. Some business owners find it best to write themselves a set paycheck every week. If you are confident that the business will retain enough funds to pay your salary each time, this will streamline the process and make it easier to accurately pay your personal income taxes.

 However, if your business is new or unstable, you may find it better to pass funds through the business account to your personal account. You might decide to retain just enough money in the business account to pay for expenses, and transfer everything that is left into your personal account. This is an ideal solution for those who have many personal expenses but few business expenses and earn wildly different sums on each contract. 

Setting Up and Maintaining Bookkeeping and Accounting 

Many business owners find themselves confused and overwhelmed by the paperwork that is involved in maintaining separate accounts. 

Check out Invoice Ninja, the leading free open-source online invoicing app for freelancers and businesses.

Also consider hiring outside help. A Virtual Assistant company can set up and maintain your bookkeeping and accounting. Your VA can even handle payroll, writing your paycheck each week. You can maintain as much or as little control over the process as you desire. You can hire the VA for a set number of hours per week or per month, or simply retain his or her services on a per-project basis.

My post last week recommended "Successful Female Entrepreneurs" as a source, alternatively, you can also find VA's from websites such as Fiverr and Upwork.

Ultimately, separating your business and personal finances can seem like a complicated task in the short term but in the long term it is an effective way to grow your business. 

 Article Source: https://EzineArticles.com/expert/Heather_Villa/388875

Invest in Yourself to Get Others to Invest in Your Business

 I'm sure you've heard it before, "You have to believe in you, because if you don't who else will?" It's a very true statement. Not only must you believe in your dreams and aspirations, you have to be willing to see them through, and that means work. Because, as another well known saying goes,

 "Nothing worthwhile comes easy." 

It may look to you that others who have achieved desired levels of success have been extremely fortunate or lucky. But even the lucky ducks know how to capitalise on their good fortune. Good luck will only carry you for so long, then it takes work to continue to see you through. Yep, back to the notion of putting in work - again. Even if you have worked hard and reaped it's initial rewards, you'll need to continue those efforts to continue to see the benefits. Don't view these efforts as mere work tasks, consider it an investment, in yourself! To take your idea or business to the next level (whatever that may mean for you) it takes investment. Before you start running out to get others to invest in your business, take stock of what you have invested yourself. Did you take time to research and investigate your target market/customer avatar, identify your competitors, and determine your marketing strategy and revenue model? Have you documented this in a business plan, if not for outside investors, first and foremost for yourself? Sadly, too many entrepreneurs get emotional about their business idea and rush to find capital to bring their idea to market. Although its great to be passionate about your business, remember it is a business and that's how the majority of potential investors (and customers) will view it. They'll want to know how they can benefit from investing their time and/or hard eared money in you and your great idea. 

I've seen many entrepreneurs introduce their product as the next great thing because "there is no competition". I have never seen that statement to be true, at least not from an investor's standpoint. Although there may not currently be direct or exact product or service competition, there is almost always at least competition from a substitute product or service. For example, although there may not be another smoke-less cigarette, consumers have alternative products they can use to satisfy their nicotine or tobacco cravings. You would need to consider those products in your competitive review for a complete business analysis. Savvy investors know this and may immediately dismiss you and your idea when they are presented with the "Look, no competition!" claim. They simply view it as you didn't take the time to complete your due diligence - you didn't properly invest in yourself. 

Another area that business owners fall short is regarding personal injection in their business. Entrepreneurs looking for funding are unpleasantly surprised when they are asked "How much have you personally invested in this project?" Yes, you should be prepared to show how you are willing to invest 10-30% of any amount you are requesting from a lender or another funder. I can't tell you how many times business owners frown upon making 1 or 2 payments upfront or walk away from funding because they don't wish to list their homes as collateral. 

Contrary to popular belief, this just doesn't apply to new business owners. I had a friend who had been operating his business for over 10 years and now needed funding to purchase updated equipment to keep the business running. Unfortunately for him, his credit was not strong and he wouldn't qualify for traditional funding. He did however own property, his personal home and some existing equipment that would qualify him for the funds he requested. He declined to list his home as collateral and was not able to secure financing. When I inquired why he choose not to list the home, he stated because he didn't want to chance losing his home if he defaulted on the loan. 

Hmmmm. He was honest. But I ask you to look at this from an investor's point of view, this is what they see - business owner without strong belief that he can make this business work; business owner willing to risk my money, but not his own. Too risky. I couldn't continue to work with that business owner - how could you convince a lender to invest in this business when the owner wasn't willing to invest himself? 

Take the time and effort necessary to invest in yourself, whether its thoroughly investigating your market or how to set yourself apart from the competition. Come to the investor's table prepared to show that you believe in yourself by putting your money where you are asking other's to put theirs. Then the passion and excitement about your idea just may be contagious enough to get you the support you need.

Image:Courtesy of Forbes

Article Source: https://EzineArticles.com/expert/Marian_White/213256

Get Out of Debt: 5 Tips for Taking Charge of your Finances

Getting out of debt and creating a stable financial future may seem like an impossible feat. You could be wondering, “How did I get here?” or “How can I get out of debt when my income is the same as it was before, and I owe even more money?” 

In order to gain a positive and realistic view of your finances, you should instead ask yourself, “What can I change to insure that I have savings, not debt, when I retire?” or “What is my attitude towards money, and how has it affected my financial situation?” By doing this, you can get to the root of the problem and begin tackling your debt in a practical manner. (Remember it may take a little time to get back on track). Here are five methods that can help you take charge of your finances: 

1) Live within your means 

This seems easy enough, but how many people have racked up hundreds or even thousands of dollars in credit card debt? If you have to rely on your credit cards, then you are clearly not living within your means. The most obvious and suitable way to get out of debt is by resisting the temptation to buy stuff you don’t need. Depriving yourself of things you want can be the most difficult thing to do. However, buying whatever you want can also the most damaging to your financial success. Maybe you did get a great deal on those shoes, but is it worth that extra $50 to $100 interest that your credit card may eventually accrue? When you have the desire to buy something, think it through. 

You can also make lists before you go to the store to prevent impulse buying. Even if you are just going to get groceries, you should bring a list and stick to it. Otherwise, you may end up spending $50 more than you thought you would on unnecessary purchases. 

Another change you can make to get out of debt is to start shopping for the holidays and/or birthdays well ahead of time. Many people put off shopping until the last minute and end up charging it all to their high interest credit cards. Why not start early this year and pay for all of your gifts in cash? Try buying one gift a week. By paying with money that you actually have, you will be saving yourself a lot of money in credit card charges. You will also be less stressed when the holidays or birthdays come around because you will already have your shopping finished.

2) Create a budget of all of your necessary expenses and stick with it 

Notice how “stick with it” was added onto that sentence? That’s because almost anyone can sit down and write out a budget. The real challenge is tracking and maintaining it. If having a program on your computer or app on your mobile helps, go for it. Just be sure to save all of your receipts throughout the day and then input them into your app/program. It is important to give each of your expense categories, such as rent/mortgage, food, and utilities, a realistic limit. 

If you only buy according to your budget, you will probably find yourself with extra money each month. With this extra money you can take charge of your finances, get out of debt, and start saving for the future. It will also help you to figure out which items are draining money from your budget. For example, if you buy lunch at work everyday for $8.00, you would be better off making your meals at home and then bringing lunch to work. Just remember that it takes many small steps to resolve your finances and take charge. 

3) Set Realistic Expectations for Your Future 

 Yes. The average person’s salary increase averages between 1.5% and 3.5% per year. And you may be beginning to expect that yearly raise or anticipating that big promotion because then you will be able to pay off your debt. Many people have the attitude that their debt is fine because they will have more money next year to compensate for their spending. It’s the adage, “Why do today what you can put it off until tomorrow?” They spend beyond their means because they are banking on the fact that they will be making more money later. And when they receive a raise, instead of paying off debt, they increase their spending because they think they have more money to spend. The reality is that living this way can extinguish any future financial stability. Also, what if the raise never comes? The promotion never happens, or something worse occurs, such as getting fired or laid off? Then you will be left with all this debt, out of control spending habits, and no money in the bank. 

So, when you receive a bonus or small raise, take that money and pay off your debt or put it towards your savings. Even if you think that you have great job security, be prepared for the unexpected. If you expect that you will be making more money, you will spend it; however, if you acknowledge that your prosperity could end at any time, you will save it. 

4) Pay your unsecured debt off—ASAP 

I know this can be a very daunting task, especially when you have several credit cards with large balances on them. You may think that you will never get out of debt. Your best bet is to begin with the credit card with the smallest balance; pay as much as you can on it each month (try to make it at least double or triple your minimum balance) while maintaining the minimum balances on your other cards until the card is paid off. This will help you to work towards your goals and will help motivate you to pay off your other cards. 

Remember, if you just pay the minimum balances, you are probably barely covering the interest. You could potentially end up paying double or triple for an item you bought a year or two ago.

5) Plan for the long term 

It’s important to plan for your retirement now, so you can enjoy it later. Look into an IRA, 401(k) program, Superannuation fund, CPP or Pension (dependent upon your geographical location). Usually your employer’s program will simply deduct money from your paycheck each month. That is one of the easiest ways to do it because you’re saving money each month without really missing it. Some employers even have a matching program if you contribute enough to your fund each year. 

Also, in order to plan for the future, you need to calculate how much money you will need if you live for another twenty years after you retire. Be sure to take into account the cost of living in your area or the area where you plan to retire. You may be living well right now, but planning and saving so that you can retire comfortably is crucial. 

Follow us on Social Media and our weekly blogs to discover how to get out of debt, save and invest your money wisely

Article Source: https://EzineArticles.com/expert/John_H._Tran/61724 

Contracts and Agreements - How to Protect Your Finances

This article is about contracts and agreements e.g. rental agreement, mortgage agreement, loan from family member or friend, credit card agreement, hire purchase agreement etc... and what you should be looking for to protect yourself and your assets. 

These are the kinds of agreements that affect most of us whether we have limited funds or a great deal of money. 

Whether we are making these contracts and agreements with people we love and trust or whether we are making them with strangers. There are some simple rules of thumb that we should all be looking at as they apply to most of us. 

Historically, most countries did not recognise women's rights to own property. You could not get a mortgage or credit without your husband's permission. 

If you wanted to know about money, we were told not to worry our pretty little heads - so it became the man's job to worry about money and the woman's job to take care of his personal needs and to be the heart of the house. He worked, he provided for their needs, she took care of the children, the household chores and her husband's needs. Consequently when a husband died or divorced her or just disappeared, she was left not knowing how to balance a chequebook, not knowing what her mortgage rates were, or how responsible she was for paying that mortgage down. She had no knowledge of insurance and was often left without insurance coverage for herself and her family. As far as her car was concerned, she knew how to put the key in the ignition and get to the nearest service station.

 Nowadays, women are in top positions in corporations but many of us still have our husband's making the major decisions on things like insurance, mortgage rates, investments, medical coverage and pension plans. 

It still occurs that when a woman gets into a relationship, she's always given her husband/partner dominion over her assets. 

She could come into a marriage with a house completely in her name and once she gets married and he wants to be put on the title to it, she doesn't question it. 

Women are also known to take the softer view. I love him, everything we have is ours. We share and share alike. I should be putting the house in both of our names. WRONG, wrong, wrong. 

If he wants to be put on the title, or you want him to be put on the title, get 3 evaluations of the house and let him give you his share of the money for that house. After all if you are going into a business partnership and someone wants to buy into your business, you would have your business valued at current prices, and that partner would have to buy in cash at the current value. A house is no different. Once he is on that title, he can do anything with that house, he can take out loans against it, and he can walk out on you, or he can mortgage it to the hilt and die leaving you with debt. 

The same can be true of a man who owns property, but men usually cover themselves with pre-nuptial agreements. Us women, historically have not been that smart. However, we have got smarter in recent years, generally our emotions are engaged so quickly and so deeply, we often have to be reminded to protect our assets. 

The same thing holds true if you own your own house and your spouse wants you to sell it so that you can move into a larger place - once again, that partner should be compensating you with the value of his or her share of the house before you sell it. Because if the marriage falls apart, either way you would lose out because when it comes to a division of assets - you only own half of the new house and none of the house that you had in your own name before the partnership. 

For example, I knew someone who had her own home that she had bought with her own money and had been living there for a number of years and that house was almost paid off. Then she got married. The new husband moved in. A few months later, he decided he didn't want to live in that house. He wanted them to sell it and live in another house. After their divorce 15 years later, all she was able to get was half of the new house and nothing of the house that she had originally. When you are dealing with monies, even if you are in a deep relationship, with a family member, a friendship, your spouse and you trust the other person deeply. You have had a lot of experience over the years and you think to yourself that you don't need a written agreement - think again. You can never tell if or when the other person is going to back off and leave you with the debts and responsibilities or if the other person is going to sell off their half of the partnership leaving you unprotected. 

You may trust this person wholeheartedly and may never had cause to doubt them - but circumstances can and often do change. For example, I knew a guy who had been having marital problems with his wife. All his money was tied up with hers and in their house. He was advised by a counsellor to start saving money in a different bank account from where he and his wife had an account, a bank she knew nothing about. On New Years Day after everyone had left after a party, she threw him out of the house and would not allow him to come back. Luckily, he had put some money aside in a separate bank account. Had he not done this, he would not have had the money for a month's deposit on a lease and he would have been out in the street. 

If you have a quote from a builder with materials included, their suppliers could go out of business, the builders costs could go up and your costs could go up accordingly. If you want to protect yourself on materials, open up an account at a builder's merchant so that you can buy the materials yourself and you can get the most competitive prices. That way, when your builder is quoting you prices for labour, you know you are just paying for labour and you can negotiate his labour costs, especially now when construction work is in such short supply.

So as you can see, on a personal and a professional level, you always need a written agreement. 

You can be in a romantic relationship or a marriage and all of a sudden your partner goes to the bank and draws all your money and you are left with all the debts. And no matter how much you love someone, where there is money involved, make sure everything is spelled out really well. Make sure your lawyer has covered everything and you are not leaving any loopholes. 

For example, I knew someone who had been married for 25 years and their only daughter was getting married. The wedding was very expensive and as soon as they got home from their daughter's wedding, she started preparing for bed. She sees her husband has a suitcase and he is emptying his drawers out into the suitcase. What are you doing? I am packing, I'm leaving you. I just wanted to wait until our daughter got married and was out of the house so I could leave you. I have found someone else. After 25 years of marriage, he just walked out and left her with a pile of debts. 

If you being asked to sign anything e.g. a husband of 30 years - make sure a lawyer checks the paperwork. Ensure that someone can explain it to you and don't be led like a lamb to the slaughter. In the end that partner may leave you, divorce you or die and may leave you with a lot of debt. You need to know what you are going to be responsible for. 

Another important point to remember is that if anyone wants you to sign papers quickly, your answer has to be NO. Don't ever allow yourself to be rushed into a financial agreement. No matter how good the deal might sound, you need time to assess whether it is right for you.

If you are ever asked to sign a lease, or a mortgage with your partner or spouse, make sure you understand it thoroughly. Make sure you can afford it. People have a tendency when they sign a lease or a mortgage to figure out how much they can afford to spend each month. What they DON'T calculate into these costs is a failing economy, or one or both of the partners being laid off or fired and they are out of work for an extended period of time and cannot find other employment. 

So if you are contemplating signing a lease or a mortgage with a partner, make sure you calculate it for just one income, because if you are basing it on two incomes in this economy you may find that you do not have enough money to cover the rent or the mortgage. 

Don't be embarrassed to tell your spouse or business partner that you want to speak to a lawyer to have him go over the fine print with you. When signing a legal document, many people don't bother to read the fine print - or if they do bother to read the fine print, they don't understand all the details. Wherever your money is being spent, that's where you need to be very vigilant about your role in protecting it. 

Article Source: https://EzineArticles.com/expert/Barbara_Goldsmith/416795