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How to separate your family finances from business ones

September 2nd, 2017 Posted in Entrepreneurship, family finance
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How to separate your family finances from business ones - financial report image

Mixing work and our personal lives never ends up being a good thing in the long-run. Apart from the fear of having your two worlds collide, there’s also the issue of practicality. When setting up a business, it is considered wise to remove all and any traces of your personal life from the mix. This makes it easier down the line when the ol’ tax records are due and even before that. Separating these two makes it easier to track everything on either end and make sure that nothing gets buried in the paperwork.

Make it official

Simple as that, if separation is your goal, make your business official. Choosing what entity to go as is crucial because it affects your finances down the line and legal protection should you ever need it. Because of the gravity of such a step, it is paramount that you run this through your accountant, insurance agent(s) and your legal representative. Two options usually find themselves as a good fit for fresh companies, these are a limited liability company or LLC and an S corp. Both effectively function as pass-through tax entities, this means that taxes aren’t paid on a business level but passed-through to the tax returns of the company holders.

Open a separate account

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When that’s out of the way, the next thing that is recommended for any potential business is to open a separate account. This makes sure that all of your business expenses are separated from your personal ones, making everything transparent and easier to grasp once taxes are due. Another benefit is having the IRS deem your business as valid, as opposed to classifying it as a hobby if you kept everything on personal accounts. The idea of separate accounts can be expanded upon, making the process even smoother – investing in several accounts for the business itself, making each transaction visible in more than one spot.

Use different software

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This essentially ties into the previous idea. If you’re already focusing on separating the two, go the extra mile. It may be a hassle to get used to two different accounting systems, but it will grow into a huge quality of life improvement down the line. Ostracizing your accounts may seem a bit extreme, but it removes any possibility of having errors and mistakes pop up from trying to do your books last minute. Separate software leads to less opportunities for problems to arise and keeps you in good standing which is imperative for a business’ success.

Opt for a business credit card

This goes without saying, a business credit card is your best friend. Every expense, every transaction, every single solitary change in your finances is logged and kept. This may not seem like much, but having actual proof of a transaction is a godsend for anyone who’s had trouble with tracking finances. If you should ever be faced with an audit, these records will help back up your own logs and make the whole thing go a lot smoother. Should your business credit not be established enough to secure a card, work it out, at least try to use on of your personal ones for business to make it easier on yourself.

Consult professionals

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Although mentioned above, it still deserves a segment of its own, consult a professional. No one likes to be the person asking for help, but this is our livelihoods we’re talking about. Seeking out professional help at the beginning is still cheaper than doing something wrong and have your business finances embody the concept of the domino effect. A plethora of companies like Darcy Bookkeeping & Business Services offer free quotes to help you get an idea of where your company’s currently at and where it could go. With a seasoned accountant on board, all of the aforementioned steps get kicked into high gear. Think of it as learning to ride a bike, we all started with training wheels.

Tread carefully

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Even with all of these steps, the road will be difficult. By separating your accounts and keeping them that way, both sides of our lives are given equal opportunity to flourish without impeding the other. Make no mistake, business is all about playing the hand you’re dealt and seizing the opportunities you’re given. We may not be able to predict what’s coming over the horizon, but we sure can prepare for the worst. Just like any venture, a good plan will see us through and that is the point we’re trying to get across – be prepared. http://credit-n.ru/zaymyi-next.html

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Family Finance and Family Business: Start Teaching Your Kids to Manage Money Early

July 25th, 2017 Posted in Money Tips
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family business finance - piggy bank image

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Having a family business is hard on its own since you need to know how to handle family and business as two separate entities as well as how not to let one suffer because of the other. This type of business usually lasts for generations or that’s the plan at least, and there’s nothing more satisfying for a parent than to leave their legacy to their children. But before taking such a big step, parents should prepare their children for this future by teaching them about some facts and aspects of the family business as early as possible.

Running a family business is no different than managing any other business. And all businesses have some basics which need to be mastered, such as managing and budgets, resource allocations and knowing how everything fits together into a successful undertaking. With the intention of helping you achieve just that, we’ve singled out a few hints to help you prepare your children for walking in your shoes one day.

1.      Draft a business and budget plan

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Just like with everything else, having a good plan can help you clarify what comes ahead and how to handle it in time. Every successful business is built on sound planning and financial predictions, the same applies to your family business and its future. Whether you’re old school and decide to use a pen and paper, or technologically savvy and decide to conduct your budgeting electronically, it is very important that you start preparing for the day your children take over the helm. Also, if you’re in any doubt you can always contact a bank or financial advisor to help you crunch those numbers.

1.      Separate business and family, but not quite

It’s very important to be clear and honest with your children from the start about what you expect from them in the future. It is prudent to leave your business problems far away from family matters, although there are some things to which the same principles should apply – money. Teaching your children about the value of money and how to be responsible with it doesn’t need to be separate from teaching them how the financial side of running the business works.

What you do need to separate are the roles. At home you are a family, and at work you are co-workers, and by separating the professional from the personal you’ll be able to convey discipline and ethics without losing your footing on both sides.

2.      Start from the beginning

Every family business is a story which needs to be passed down from generation to generation. Your job as a storyteller is to tell it as simply and interestingly as possible so your successors understand what’s ahead of them and are willing to take their place when the time comes. The latter means you will have to explain to them the rules and responsibilities, structure, management, financial transactions and dealings, as well as the clientele, future plans and the market.

3.      Finances – the backbone of your business

family business finance - computer finances image

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If you are the soul, then your finances are the backbone holding it all together. We’ve already mentioned that money and how to handle it responsibly shouldn’t be treated any differently than you do it inside your family. From an early age, your children should know that every penny counts and that it has to be earned and spent responsibly. You can let them work on some summer jobs for the family business, starting from the lowest position so they could connect the effort with the reward. Also, you can ask them to present you their ideas and financial plan on how to realise them and make them profitable.

4.      Representation is also important

There is one other aspect you should also include and that’s marketing. This one might be closer to your children’s interests than you may think since today’s advertising efforts are mostly digital and Internet-based.

family business finance - office desk image

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Help them understand that by investing in the presentation of your family business and its brand, they can increase the profit and promote the image. It may seem easy and a money saver to do it by themselves, but entrusting the SEO company to promote your website and hiring design professionals to embellish your image will save them time and resources while providing excellent results. It will also be a good lesson for them to see how allocation of work can be beneficial for the business.

Finally

family business finance - family fun image

Don’t be afraid to talk about money with your children. By teaching them about its value and significance you will inspire them with responsible habits and manner of handling it. Showing them how your family business works from the inside out and the important role financial background and forecasts have in its success will prepare them for ongoing and new activities when they take over. http://credit-n.ru/offers-zaim/ekapusta-besplatniy-zaim.html

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Preparing Your Kids to Eventually Succeed You in a Family Business

July 11th, 2017 Posted in Entrepreneurship, Money Tips
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Preparing Your Kids to Eventually Succeed You in a Family Business - family image

Even though running a budget of a family business and running a household budget are in no way the same thing, they are more than closely related. In a way, the way in which you handle your family finances reflects the way in which a family business is governed. First, you start with one generation (the parents) who are in charge of running the household/company and then proceed to pass on the baton to their successors.

At first, children or earning young adults are in charge of no more than slightly contributing, while in time they might start to play more vital role in the decision-making process as well. With this in mind, here are a few ways in which teaching your kids about household chores and budget might prepare them to take your place in the family business when the time comes.

1.      The division of roles and responsibilities

The first obvious connection between these two notions is reflected through the issue of roles and responsibilities. Each family member gets assigned tasks that are in accordance with their abilities and experience. For instance, you wouldn’t expect a 10-year-old to do the entire grocery run, but you might ask them to clean the bathroom, wash windows or even wash the car. Nonetheless, once you start adding these responsibilities, you need to give more recognition to your child in order to keep them motivated. Otherwise, you might make them feel underappreciated, which might discourage them from taking future initiative within the company.

2.      Start early

Another thing you need to keep in mind is that the age of the child (we used in the previous example) is not the best indicator of the part that they should take in the company. Corporate experience is a much more reliable factor. Of course, we are not suggesting you should push your child in a company business before they are ready or exploit child labor. Still, you could have them run some business errands during weekends or breaks at quite an early age. In this way, you can include them in the numerous processes of your business and have them learn about the company from inside.

3.      Use the perspective of their generation

From these menial positions, they will later advance to some more delicate administrative tasks and in time even advance to a decision-making position. You see, the generation Z (the post-millennials) tends to be much more hyper-connected to the world and therefore might have some radical new ideas your company as a whole might benefit from.

For instance, you might ask your teen about the advice surrounding your company’s social media campaign, especially if their peers are one of your target demographics. Next, you might consult them when inquiring about LED lighting solutions for your business and see where they stand in this regard. Having someone else (someone adult) actually need their opinion is definitely going to make them feel appreciated.

4.      Teach them the value of money

Finally, one of the most important lessons that any parent can teach their child is – the real value of money. By introducing them to a family business you can show them where your family’s income comes from and in this way demonstrate that there is a finite amount of it that needs to be managed carefully. Next, instead of giving them an allowance, you can give them a ‘salary’ for all the hard work they invest in the household and family business. In the end, make sure they know the difference between emotional and rational purchases and in this way nurture healthy spending habits. They will need this as both adults and future management of your company.

A lot of young people whose parents own family businesses feel the urge to abandon it and start something of their own. This, however, most commonly happens due to a mistake in the attitude that these parents sometimes assume. You need to make it clear from the very beginning that the company in question is not ‘mine’ but ‘ours’ and that they are the part of it from the moment you start it. Even if they are too small to serve as its active part, these children are probably the motivator of its existence. It is your job to make them feel this way, as well as to prepare them for all that is to come.

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