 |
Personal vs Business
Posted by randy on: 2005-11-17 09:35:14
Matt Bacak
Many business owners agree that starting a small business will
involve the personal finances of the owner, even though the
business may be formally regarded as separate entities. This is
probably due to the fact that the business owner may be likely
to lose his source of income during the initial operations
period, especially during the first 3 to 6 months. With this,
adequate planning, budgeting and saving should be done by the
business owner prior to starting the business so as to have a
pool of funds to support personal expenses.
One of the first steps to do this would be to track your monthly
expenses on a daily basis in order to adequately determine your
actual personal costs. Be sure to include buffers for emergency
or surprise expenses. Once you have a clear idea where your
monthly expenses go to, you can then create a budget for the
period that your income may be affected. It may also be a good
idea to pay off any outstanding debt such as home loans or car
loans, so that you have less to pay for during the critical
period.
It is of utmost importance that you ensure that you have enough
to sustain you, as many new business owners overlook this
factor, and end up going back to employment while still
maintaining their business after a few months, due to the lack
of personal funds.
Apart from that, if you are starting a business for the first
time and are in need of obtaining a business loan, the bank or
credit union will evaluate your application based on your
personal credit rating. This is due to the fact the company's
credit history is not yet available for references by these
financial institutions. Therefore, the best history that they
can base their judgment on your creditworthiness would be the
credit history of the business owner.
What is the implication of this? This means if you are planning
to start a business and obtain financing for it, it is best for
you to run a check on your credit report in the event of errors
and flaws. There have been cases where loans were rejected due
to an unfavorable credit report, which was actually due to
errors made by the system. With this, months may be needed to
correct these problems, which may cause delays for the business
owner to obtain the required start-up funding for the new
business.
In conclusion, the business is a separate entity when it is
registered as a private limited company. However, small business
owners still may not escape entirely from being regarded as
separate entities if they are the only owners of the businesses
that they are running. Therefore, business owners should be
well-informed on the areas that would require more focus on
before they start their businesses.
About the author:
Matt Bacak became "#1 Best Selling Author" in just a few short
hours. Recent Entrepreneur Magazine's e-Biz radio show host is
turning Authors, Speakers, and Experts into Overnight Success
Stories. Discover The Secrets To Unleash The Powerful Promoter
In You! Sign up for Matt Bacak's Promoting Tips Ezine ($100
value) just visit his website at http://www.powerfulpromoter.com
or http://promotingtips.com
Open community website
http://www.business-business.biz
Recommended sites
To design your custom retirement plan.
For planning an IRA rollover this is the site to review.
For professional asset allocation and the wonders it can do.
Managers selected to fit your needs.
Related Stories
Post new Comment
This site does not allow anonymous comments. Registered members can login to participate. Registration is free and takes only a few seconds