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Tuesday, November 24, 2020

Separate Your Bank Accounts: Business and Personal Life

Separate Your Bank Accounts: Business and Personal Life

Mixing business accounts with personal accounts reveal very poor management of your capital and income. 

It is bad management because you are not able to know if your business is generating income because you are still deducting from the final amount. Lack of capital management also prevents you from promoting improvements in your processes and improving your promotion, thus restricting the reach of your brand.

How to Be Your Own Boss

And, ultimately, mixing personal accounts with business accounts can give a false sense of “wealth” and motivate you to spend more than what you have right now. It remains essential for a business owner to fully understand what falls within the framework of an abuse of corporate assets. The definition of this offense, specified by the Commercial Code, concerns two practices:
– The first is to use the property or the credit of the company for purposes contrary to its interests , for its only personal use.
– The second is to use the capital of the company to favor another company in which we will have direct or indirect interests.
Only expenses relating only to the company can be insured with company funds: any other use will be considered fraudulent.

To avoid ending up in this kind of case, it would be wise to call on an accounting firm to help you manage your expenses and money outflows or you can simply separate your accounts.

The company account will therefore be used to pay taxes, buy raw materials if you are a production company, pay salaries and invest in new technologies to improve the productivity of the company.
The personal account will be used to pay your rent, do your shopping, pay the daily bills relating to your life after work.

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