6 Minute Read
Why Should You Separate Your Finances?
Hi hello and welcome my virtual friends! Firstly, I want to recognize Martin Luther King Jr. Day, and thank him for his accomplishments. We all know it’s coming, sneaking up on us like every year, that’s right, tax season is coming! Therefore, I thought it was the best time to post about finances, and why you should be separating them. This is Part 1 of a 2 Part series. Part 2 will be dedicated to Useful Tools, Tips And Tricks, for keeping your accounts in order, and will be coming out next Monday! So keep in touch and subscribe to be notified when it drops! Separating my finances was not something I really thought of at first when I dove into reselling. I still thought of it as income, which it is of course, so into my checking account it went. This was a mistake, let me tell you why. There are 3 very important reasons.
*Disclosure: I am not a cpa, accountant, or financial advisor. Therefore, what I write about, (in this post and always), is solely based upon my personal experiences and opinions. Please get professional advice from your own cpa, accountant, or financial advisor for more information upon what is best for you and your business. Thank you for understanding and for reading! -Shelby
Dreaded Taxes
I usually save things I don’t like for last, but as of late I’ve been trying to put those things first on my to do list. I am usually much more proficient and accurate when I get the harder tasks out of the way at the start of the day. So, here’s to putting taxes first!
Taxes of any sort are already a huge headache, unless you or your significant other are an expert in accounting and numbers. This is NOT me. (And I’m sure not how most of everyone else is, either). So, by combining your accounts into one, you’re significantly increasing said headache, come the end of the year and, (cue the scary music), tax season.
By keeping your accounts separate, whether it be a different checking/savings account in the same bank, or even a whole other bank, is solely based on personal preference. When expenses and outsourcing and inventory purchased for your business come out of the same account as your pickles, toilet paper, and cat litter…well, it makes for quite a long day. (For you, and for your accountant).
*Pro Tip
Keep in mind, that if you are organized and on top of your tax information throughout the year, that will also bring your total expenses down. How? Because the bigger pile of unorganized receipts you hand your cpa, (certified public accountant), and the messier your bank statements are, the longer it takes them to sort through and organize for you. This is also a personal preference. I’m not sure about all cpas, but I know that a lot will charge more, the longer it takes them to get through your messy box of papers. Save money, save on expenses, and stay organized!!
Related: 8 Things You Need to Do to Decrease Your Expenses While Increasing Your Profits
You Know Immediately What is Incoming AND Outgoing
Knowing your numbers is essential when running your own business. It is extremely important and you should prioritize this above all else. I definitely didn’t follow my own advice at first, and I mean for like, several months, when I say at first, and boy oh boy did I learn from that mistake.
It is very easy if you start from day 1, and do all the things right, but the reality is, none of us usually work that way. Unfortunately, we then get behind, and then more behind…and then end up sitting in a big pile of papers strewn everywhere trying to figure out what goes in which folder and so on.
I literally did just that. I was several months in, probably about 6 to be exact, and I was super duper excited about my progress thus far. Then, my husband asked to see my numbers, etc. Hmm. The super duper excitedness lost its shimmer pretty quickly at that point.
I mean, he was asking a valid question, and it should have been a simple answer. But the truth was, that I had absolutely no idea. NONE. This was not good. Knowing your numbers is essential to know if your business is growing, failing, or somewhere in between. Luckily, after sitting in that giant pile for hours (and days) on end, mine was on the up and up. Phew.
Those first 6 months give or take were rough, I was still learning (and still am), how to make charts/spreadsheets/etc. But nowadays, I am much more disciplined with keeping track DAILY of my spreadsheets, and you can learn all about my advice on those in the next post a week from today. Be sure to subscribe to be notified and get your business back on track!
Helps Control Your Spending
Keeping track of every penny that goes in and out, helps you majorly control your spending. For example, I’ve been outsourcing a lot the last few months as my business grows, and it is really putting a damper on my profit margins.
The bright side to this, is that I know my numbers. I know that as I grow and invest more back into my business, I can afford to absorb more costs of outsourcing, and stocking up on bulk inventory, whereas these are things I couldn’t even think about in the past. Slow and steady is definitely the way of reselling, (in most cases), and you have to be okay with that.
Related: 22 Reasons Why I Became a Reseller
I know now, just how much I’ve spent on each category, and how much I can afford to stock up, and what my profit margins are. I also know what price point I need to keep my cost of goods at, what the lowest I can take for an item is, and when I need to move it if it becomes stale.
If I didn’t keep good track of my separate finances, I would be guessing at every corner, and may end up with a business in debt instead of a profitable one. Keep your finances separate and keep a good eye on them every single day, and you won’t have any questions about what you can invest in, and how much you can invest.
Related: Why Cutting Your Losses Isn’t Always a Bad Idea
Thank You!
Agiantthanks to everyone that has supported me this far into my journey! I greatly appreciate you returning to read my posts hope that you will continue to drop by in the future.
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Happy selling friends!
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