Many business owners begin on a small scale in response to these unexpected questions: “Have you thought about selling those?” or “Can you do that for me?”
They realize they might be able to make extra cash on the side—or even turn their hobby into a career.
When a business venture starts this way, the owner usually doesn’t know if it will gain traction or expand. As a result, many business operations start with business finances that are simply an extension of personal finances, using personal accounts. As the business grows, the owner may not make any adjustments, thinking, “It’s all my money anyway, so why does it matter?”
- 4 reasons to separate business and personal finances
- How to separate business and personal finances: 6 simple steps
- Separate business and personal expenses for accuracy and protection
Operating a business through personal financial accounts presents significant problems on many fronts.
The foundation of financial health for every business owner is separating the finances of the business from the owner’s personal finances. This is true for businesses of all sizes, even the smallest ones with only one owner and no employees.