How to distinguish between your personal expenses and accounts of the company.

Isolating individual costs from organization accounts is difficult for administrators, no matter what the size and area of the business.

It is important to give close consideration to the numbers and, most importantly, obligation to go with the most ideal choices according to the qualities.

However, there are some actions you can take to make this process simpler and easier.

In this article, we will talk about the importance of separating personal expenses from company accounts and present five practices to adopt in your management.

Did you like it? So keep reading!

Why is it important to separate accounts?

Separating the “individual” from the “legal entity” is one of the first steps to starting a good financial management process.

After all, your individual expenses are different from your business expenses. Personal credit cards or anything like that cannot be entered into the company account.

Oh, and it’s also not worth taking money from your fund to cover your business expenses. Everything has to be well balanced.

With this action of sharing expenses, you can:

• have a better long-term vision of your financial planning;
• manage your resources appropriately, both personal and business;
• reduce the risk of tax problems for individuals in the event of any setbacks.

These three points are enough to guarantee a longer useful life for your business, in addition to avoiding many headaches.

Financial control also serves to find weak points in your company. Considering that an enterprise has to make a minimum profit to continue existing, right?

5 tips for separating personal expenses from company accounts

Now that you know the “why” of separating your accounts, it’s time to learn the “how”.

But don’t worry! It is all much easier than it sounds.

To that end, we have five tips. Follow now:

Make a detailed study of your financial reality

A financial study is the first step to begin this process of separating accounts.

I must say that if you are not knowledgeable about your finances, it will make the organization process a little more difficult.

Here you need to make a detailed and critical assessment of your company’s financial reality.

Points such as revenue, resources, profits and expenses are fundamental elements at this moment.

With this study, you will be able to visualize the reality of your business much more clearly and decide what your next steps will be. Of course, it is necessary to think long term.

Evaluate the possibility of automating your identification process with the help of business management software.

Similarly, repeat this process in your personal finances. In fact, you can even use simple spreadsheets to record fixed monthly expenses.

Set your remuneration

With the study of the financial reality completed and your planning in hand, it’s time to define your gains.

It is very common to see entrepreneurs who take what is left of the company’s monthly revenue for themselves, as if it were their salary.

This, in reality, is a mistake. This act can even be quite harmful to the financial health of the business.

You need to have capital in the company. You need to have money on hand for investments or eventual expenses.

Here, the ideal is for you to define your “salary”. It can be a fixed monthly amount or a percentage of earnings.

This money is what we call “pro-labored” . If you have partners, you need to make this same definition with them.

This definition needs to be quite frank and honest so that it does not affect the business’s finances.

Thus, with the withdrawals defined, the company’s working capital continues to be preserved. No “clearing the books” and not thinking about the future of your business.

It is important to point out that many companies go bankrupt due to lack of financial organization. It is necessary to have good management for the business to bear fruit.

Separate bank accounts

Now that you will have a defined salary, the next step is to separate your bank accounts.

Have a personal checking account and receive money from your individual there.

This way, you considerably reduce the chances of touching the company’s money for personal purposes, even if accidentally.

Don’t fall for the story of saying that you know exactly the amount of money the company and its people have. We all know this won’t work.

With frequent inflows and outflows of money, it is practically impossible to keep up. The right decision is to opt for separate accounts.

This practice is also advantageous because it is common for banks to have different products for individual and legal accounts.

Thus, you will find benefits in both modalities.

Avoid mixing expenses whenever possible

In the same way that you will separate your accounts, expenses should not be mixed either.

What does that mean? Expenses relating to your company must be paid from your legal entity’s account. Those with the CPF will follow the same logic.

However, this type of arrangement will only be possible if you have completed the other steps above.

Only with an assessment of your finances, definition of pro-labore and separate accounts will you be able to clearly separate these expenses.

Analyze numbers frequently

My first tip here was to study your financial reality.

However, this procedure should not be done just once. In reality, the more you can update these numbers, the better.

Therefore, establish a recurring frequency to analyze the data.

This way, you will be able to check the company’s financial health and see if plans need to be reformulated.

You can also make updates regarding your personal expenses to find out if you can increase your pro-labore, for example.