I mentioned in the post, 7 Things You Must Know Before You Venture Into Pharmacy Business, that your business is not your ATM. In another article I advised that you should not delve your hand into your business money as it may hamper the growth of your business. In this article I will show you some ways to separate your personal finances from your business finance. As a pharmacy business owner, it is compulsory that you separate these two finances.
- View your pharmacy business as a separate entity: You must see that your business is a separate entity from you. By registering your pharmacy, you gave it a life of its own. Just as you cannot spend someone else’s money as your own, you must not spend your business money as your own. Spending your business money is like stealing from your business and will have detrimental effect of its operations.
- Put yourself on salary: You own your pharmacy business but at the same time you also work for your pharmacy business. Just as you put other staff on salary, you should also put yourself on a salary. You should pay yourself a reasonable salary. When you take a salary from your business, it becomes a business expense which is captured in the financial statement.
- Use separate bank accounts for yourself and your business: Open a bank account for your pharmacy and ensure that you put all money from your business in it. Only issue cheques for business related expenses from that account. Use your own personal account for your personal transactions. Practicing this strategy will not only separate your personal finance from that of your business it will help you monitor how you spend money in your business.
- Practice budgeting: Budgeting is important in both your personal and business lives. A budget will help you with your expenses and you will be able to do the most important things in your business. Make budgets for both your personal and business transactions, that way you already know how much money you have and how you desire to spend it. When you budget well you won’t have to put your hand in your business fund you will be guided with your expenses.
- If you must take money, treat it as loan: Sometimes it may be inevitable to not use your business money for your personal expenses or vice versa. If this situation occurs, you should treat such money as loan to be repaid. And you must ensure that you paid it back. This way you can keep your business money intact.
- Keep proper records: You should keep proper records of both your business and personal expenses. If you don’t keep proper record you may muddle up your expenses. You don’t to notice a significant change in your finances and automatically attribute it to your business, when in fact it may involve your personal finances. This could also work the other way around.
It is very important that you apply these pieces of advice to separate your personal finances from your business finances so that you do not cripple your business with your personal expenses.