Why Business and Personal Finances Must be Separated

pie chartThe nature of your business really doesn’t matter when it comes to keeping your personal and professional finances apart. You might have an established enterprise, or you may just be starting out, but whatever the case, you have to keep in mind that keeping your finances together is not a good idea.

A number of people who work from home somehow come up with the idea that it is okay for them to keep both their personal and business finances in one account as that is so much easier. Once again, as a business or company owner, you need to know that whether you have a part time business or a full time one, it is mandatory that you keep separate bank accounts. There are some major pitfalls if you continue to mix up your business and personal finances.

Easy to track

People who have had one account for both their business and personal lives have always regretted it sooner or later. The truth is that with a single account, no matter how closely you monitor it and note down the transactions and what not, you will still not be able to get to know the exact amount that is going into the business or coming out of it for that matter. This is one of the primary reasons why you need to start thinking about separating your accounts.

Saves you from coming under the radar of the IRS

Even if you think you are tracking your account pretty nicely, you need to consider switching because of the IRS. Now even though they do not ask you to keep separate accounts, they do need to know exactly how much you are profiting from the business. Having a different account for business purposes will ensure that your personal money doesn’t end up being thought of as business money. Another thing to add here is that separating accounts becomes all the more necessary if you are incorporated or if you plan to be, because a company is required to pay taxes.

The Image of your company

It might not seem like it if you have just started your business, but you and your company need to have a professional image. The truth is that having a joint account will make it look like you are not running a business at all but that it’s simply a hobby for you which you enjoy. When building up a company or business, you have to make sure that people take you and your work seriously. Having a single account for two very different purposes will not help you in this regard.

Manageable expenses

With a separate bank account for your business, you or anyone else who is handling the expenses will have a much easier time doing it. Dividing these two very different aspects of your life will ensure that you aren’t exceeding on the taxes and are managing things very nicely. Plus, because everything will be on a different account, you will have no difficulty in making transactions as there will be no confusion.

Avoids getting you in trouble

Okay, so let’s say that along the way, while you are successfully running your company, you are suddenly slapped with a law suit. The rule is simple, having separate accounts will keep you safe and will provide you with the legal protection you need. If you have the proof of a company as a separate entity, the law says that the blame goes on the corporation and not on you as a person. On the other hand, if you do not keep two accounts, you will be held responsible for the error that has been committed.

Therefore, as a conclusion, you can say that it is a good idea to keep separate accounts for business and personal matters is because it will be easier to track, you’ll be saved from the IRS, you will maintain a good image of the company and lastly, you will avoid getting into any kind of legal trouble.


What to Look for in a Stock Broker

stock brokerInvesting in stocks is ‘the’ thing right now. Almost everybody is doing it and they aren’t wrong either. The truth is that an average person who has a job will retire at the age of 60 with not a lot to go on for the rest of his life. Yes he might have saved but that amount is either not going to last too long or isn’t going to provide the quality of life that he needs or wants.

When you are investing, other than money, what is the one thing that you need? A stock broker of course. Now while different kinds of brokers can be found everywhere, not every one of them can be trusted to bring you profits, that is, not every broker is a good one. So, the purpose of this article is not only to educate you on how to look for a good stock broker but also on what the characteristics of an expert one are.

How to look for an experienced stock agent

  1. When investing into stocks, always consult your friends and relatives. If someone in your circle has had a good experience with a broker, ask them to refer the person to you. If no one knows of one, call up brokerage houses and ask them to assign someone to you.
  2. Once you have a list of names with you, interview all of them. Have a discussion with them about your finances and also about your future plans. Then, give them a chance to bring forward their ideas and suggestions. Remember that if you want your broker to succeed, you need to choose one who really cares about your investments.
  3. Next, check the reputation he has in the market. There are many official places in which you can look for the broker’s previous record.
  4. Once you have selected a stockbroker don’t get too excited and give him a big sum. Instead, your objective at the first few interactions should be to entrust him with a small amount and then see what he is able to make of it. While he is working on your amount, make sure you stay in contact with him to how he works and if you are comfortable with him.

Qualities of a successful broker

  1. Although there are lots of qualities of a successful stockbroker, there is one that every one of them has to have. Your broker should be open to new trends. He shouldn’t depend on old rules but learn new techniques to succeed in the market.
  2. The person you have hired needs to be strong willed and extremely committed because without this quality the competitive market will do nothing but crush him.
  3. A successful broker will also never blame the market, the company or something else for his losses. He will know that no market is always the same and that there will be highs and lows everywhere. Still, his expertise will only be evident when he is able to take some good out of a loosing market.
  4. Finally, an excellent and professional broker is he who accepts his losses wisely. He learn from the mistakes that he has done and try not to bring him down again.



How to Make a Budget for Your Small Business

Pen and Calculator on Financial SpreadsheetDeciding and planning to start a business are very different from actually initializing it and making it into a reality. The fact of the matter is that you need to do a lot, and one essential part of the things that need to be done is the budgeting of the company that you are starting.

Budgeting is important for several reasons. First of all, without a proper budget plan, you won’t be able to know how much you have spent on the business, where the money is coming from and of course, where it is going. If you have a partner or if your business is added with investors, then the budget report becomes all the more crucial as you will need to make them aware of the money matters. Starting to write a budget plan from scratch might be hard at first, but then you also need to remember that doing it right the first time will ensure that you can monitor and asses your company’s performance with ease.

Although budgeting plans are lengthy and very detailed, there are a few basic points that need to be mentioned in the plan, these are as below.

Start with the material

Gather the costs of the raw material which you have. These will also include any supplies that you may be using along with the information of their quantities and rates. If you are constructing something, then you also need to include the man hours that have been put into its development. Remember, be thorough.

Office rents or mortgages

A lot of money goes into the payment of rents and mortgages and so they need to be calculated as well. Also, if you are using any other kind of facilities, include those in the budget as well. Another major contributor to this section is rented equipment, if you have any. Make sure you note the rent, and the hours that the machine has been used for.

Salaries and wages

A major chunk of your business goes into the salaries and wages of your employees, so it is critical that you note these down as well. If taxes apply, do the math and work according to that. If you are offering any bonuses or sales commissions, these need to be mentioned in the report as well. Also, include any benefits such as health and security if they are being offered.

Estimate the bills

Your basic budgeting also needs to include the utility bills of things such as gas, electricity and water. If you aren’t sure about them, ask any business such as yours and they might be able to help you out in this regard.

Travel expenses

If you have a business that requires some kind of travelling then these should go in travel and transportation expenses. However, travelling expenses aren’t easy; there is a lot that you need to research about. For example, if you are sending an employee abroad for a business transaction, you need to know these things.

  • How long will he be going for?
  • Which hotel will he be staying at?
  • How much food expenses will he be provided with?
  • If there is car travelling involved then what is the cost of the fuel per mile?

Advertising and marketing

Your business is going to need a good marketing strategy if it has any chance of survival in the competitive market of today. Sit down with the people who will be handling your marketing and ask them what kind of promotional and advertising costs they will need to work with.


The rise of TV shows like “Til Debt Do Us Part”

tvIf you have ever watched an episode of “til debt do us apart” then you already know that it is a reality TV show that helps couples get out of debt. The show focuses on married couples mostly as it has been seen that first major cause of divorces and failed marriages are the financial issues the couple has to face. Because everyone has a different individual nature, no two people can agree on how they should go about managing their financials. As a result, what happens is that the marriage goes through hell and eventually the two people go their separate ways.

The show follows the financial guru Gail Vaz-Oxlade from home to home so she can help couples who are either in very deep debt, or who are headed there very soon. Although she offers a variety of tips to these couples according to their situations on the TV show, there are some basic ones that you can apply to your life if you are having financial troubles as well. They are as below

  1. Get rid of credit cards

The first thing that Gail Suggests is to get rid of those menacing credit cards. Cut them up, burn them or do whatever you like but the key to debt free bliss is to throw the cards away. Instead of keeping cards and getting higher into debt, depend on actual money. Keep a record of any items that you purchase so that you know where your money is going.

  1. Make some more money

It is important that you try to bring in some extra cash even if you and your spouse are working full time. Give in extra hours at the office or give tuitions in the evening or something similar that interests you. Whatever you do, you have to remember that for you to get out of all of the debts you need to start taking things very seriously.

  1. Straighten out your priorities

Okay, so you are in debt, you have realized this long time back, but realizing won’t get you anywhere unless you do something about it. So, sit down with your spouse and straighten out your priorities. Decide what’s important and what can wait until you are out of debt.

  1. Relax and get back to life

Accept the fact that you are in debt and that you are doing something about it and move on. Remember that your debts cannot be lifted magically in a single night, it will take some time and until then you need to relax and be patient. If you are facing problems because of the finances with your spouse then the two of you need to sit down and have some alone time so you can start figuring things out.

  1. Pay debt and save as well

Paying your debt doesn’t mean you have to stop spending altogether. If you had plans for travelling then don’t cancel them, just strategize something for sometime later. The objective is to save even when you are paying off all that debt.

  1. Don’t spend needlessly

One of the primary reasons why families and individuals alike end up in debt is because of needless spending. If you can cook food at home and enjoy it with your family around the table, why go to a crowded restaurant? Once again, having a credit card makes us buy things we do not need to, so if you have followed the first step, you have already stopped spending needlessly.

  1. Manage your files and folders

You may not realize it, but having the files and folders accessible at the right time is extremely important. Don’t leave important files of interests and other important stuff just lying around. Keep everything filed and within reach so you know where they are when the time comes.

  1. Be prepared to sell

Parting with things that you have had for a long time is hard. Particularly things that you have become very attached to, but you need to remember that getting out of debt is also a very serious matter. If, you are not able to pay it all off with what you have saved up, then it’s time for you to think about selling goods such as jewellery, furniture, automobiles etc.