If you are doing it right, starting a new business is usually incredibly hard work. From setting up the foundation of your corporation to hiring a team and going after the clients with necessary marketing measures, there are many details to cover and usually months (and sometimes years) to wait before the profits start rolling in. During that time, you may have found that your personal funds have dwindled significantly too if you have been supplying your own capital and making loans to your corporation.
Focus on Good Documentation & Organization
Financial organization is key from the beginning, and this means separating your personal and business funds, along with saving receipts and documenting all deposits, withdrawals, and expenses. With so much helpful accounting software available today to help businesses of all sizes, keeping track should not be a problem. It is the actual spending practices that can be the issue; for instance, if you are running a bit low on personal funds, you might consider using your business credit or debit card to pay for personal expenditures, lunch or dinner out (when there is no client or business expense involved), or you may even find it necessary to hit up the ATM for some cash—or the credit card for an advance.
Avoid Creating Extra Paperwork & Headaches for Yourself
You may be ready to spend on an impulse item in the moment, having forgotten your personal credit card. Or maybe you haven’t had time to pay yourself yet and you are considering skipping that step and just paying for what are obviously personal items, through your business account. After you have done that once or twice, you may find that it is all too tempting and easy to do. Take a step back though and consider the headache you are creating for yourself in having to backtrack through payments, repayments to the corporation, fixing paperwork, and explaining the overall mess to your accountant—or worse, the IRS.
Don’t Put Your Business in Jeopardy
You’ve worked too hard to compromise your corporation and the protection it offers you—especially from legal issues and creditors. Avoid mixing funds in the myriad different ways possible (often though you will find that your bank will not allow you to, which is added help), such as depositing business checks or cashing them for personal expenditures, withdrawing cash for undocumented purchases, charging your credit or business debit card for personal expenses, transferring money without adding a memo, or failing to set up separate checking accounts altogether.
Contact Us for Help
Do you have questions about your business? Are you in the middle of a business dispute and require experienced representation? Call Shane Coons now at 949-333-0900 or email us at Shane.Coons@seclawoffices.com. We will be glad to review your case, answer your questions, and help you move forward with success.