Why You Should Keep Your Personal Credit Separate From Your Business Credit

A lot of people who start a new business would most likely finance it with personal funds. There savings or loans from lenders or banks or their retirement money is usually the seed money. Because you combined your personal money with business money you may likely end up involving your assets in providing collateral for the money you borrowed.

More often than not you soon find that you are running at above your personal credit limits This type of financial situation readily compromises your financial security and leads to bankruptcy. It is very unfortunate that a large number of small businesses are unable to get loans from the right sources and therefore forced to run on personal credit cards.

Now before you involve yourself in running your new business with your personal funds realize that it is risky and that the best practice is to separate your personal credit from your business credit so that you do not compromise your personal assets. A lot of people without considering the attendant risk continue to daily make the mistake of using their credit cards to run their businesses, do not be like them.

If you separate your personal funds from your business you protect it from entangling your personal assets with any losses that might occur in your business while at the same time encouraging opportunities for faster development of your business.

The Advantages You Get For Using Only Business Credit To Run Your Business

The separation of your personal account from your business account ensures protection of private assets from any loss that your business incurs. This approach to running your business will surely protect you and your family from unnecessary loss of money and assets that have nothing to do with your business.

Note that if you mix up your personal credit with your business credit you open yourself to financial implications and responsibility for all debts if your company becomes bankrupt. It is without doubt better to separate your accounts to ensure that your hard earned money and property do not get taken over by your business responsibilities.

Company Advantages With Business Credit

The first advantage is that you will save your personal money even when your company goes under.

And do you know that lenders and banks would find it easier to lower interests for leases and loans if you have a transparent credit profile? Also your company having this kind of profile would find it easy to collect inventory and get discounts from suppliers. A business account that is not mixed up would be easier to run since its financial structure would be better organized making it easier to keep tabs on both the accounts and taxes.

Fundamentally, if you achieve a stable and reliable accounting system it becomes much easier for you to attract new partners and investors who would find it easier to see your well organized accounting structure and cash flow.

To succeed in business you must realize that financial best practices is the bedrock. I like to repeat that separating personal from business accounts is the sure means of protecting your assets while allowing your business to grow naturally on business credit. Again, bear in mind that your bottom line is to improve your business without unnecessary risk to your personal assets

When a business is well organized it opens doors for more business through goodwill and credibility that build a business fast. Let me stop this discuss on the importance of separation of personal credit from business credit by reiterating that success depends on best business practices in any venture you may wish to go into, and that mixing your personal credit with business credit is a sure way to bungle your company