Self-Reliance
7: Learn


“Keeping Separate My Business and Personal Money: Learn,” Starting and Growing My Business for Self-Reliance (2017)

“Keeping Separate My Business and Personal Money: Learn”

Learn

Maximum Time: 60 Minutes

1. Helping Both My Business and My Family

Watch:

“Opportunity of a Lifetime? Part 1,” available at srs.lds.org/videos. (No video? Read the script at the end of this section.)

Discuss:

Mark wants to help his sister, but he also wants to expand his business. What do you think Mark should do?

Read:

Last week we discussed the importance of keeping a daily record of our revenue and expenses. Developing this habit is essential to creating a successful business. As this chapter will explain, another essential habit is keeping our business money separate from our personal money.

2. Separating My Business and Personal Money

Watch:

“Opportunity of a Lifetime? Part 2,” available at srs.lds.org/videos. (No video? Read the script at the end of this section.)

Discuss:

What do we learn from this video about keeping our business money separate from our personal money?

Read:

Pay yourself. As your business begins to earn money, you need to decide how to pay yourself. Many business owners start by paying themselves a small salary, which can increase as the business grows and becomes financially stable.

Keep separate bank accounts. The money you pay yourself should go into your personal bank account. This account should be separate from your business bank account.

Don’t rob your own business. Successful business owners do not take money from their business bank account to give financial help to family or friends.

Watch:

“Opportunity of a Lifetime? Part 3,” available at srs.lds.org/videos. (No video? Read the script at the end of this section.)

Discuss:

  • Do you think Mark did the right thing? Why or why not?

  • What have you learned about saying “no” that will help you as a business owner?

Read:

Successful business owners understand that they need to save money in case any problems or difficulties arise and to help their businesses grow. When considering helping someone financially, we should use wisdom to determine reasonable limits and conditions. We should rely only on discretionary personal resources and should never use business funds. Above all, we need to make certain that our business is a “house of order” (D&C 88:119).

3. Paying Tithing on My Income

Read:

We receive great blessings from paying tithing on our income. If we keep our business money and personal money separate, it’s easier to calculate our tithing. Remember these principles:

  1. Keep business and personal money in separate bank accounts.

  2. Pay tithing on personal income (such as salary) that you receive from your business.

  3. Money in your business is not tithed. You should use that money to pay for business expenses, salaries, and business growth opportunities.

4. Keeping Separate Records

Read:

In addition to having separate bank accounts for your personal and business money, you should also keep separate records. Mark Bailey keeps daily records of all the money that comes into his business and all the money that goes out. He also keeps daily records of all the money that comes to his family and all the money that goes out. These records are called revenue and expense logs (for business use) and income and expense logs (for personal use).

Discuss:

  • What aspect of separating the business and personal money was most challenging?

  • What insights can you gain from these business and personal income statements?

Read:

Successful business owners keep daily records and use them to make informed business decisions. While many business owners don’t enjoy keeping records, they make it a habit and a priority because they know that having accurate revenue and expense information will help their business succeed and grow.

New business owners often use spreadsheets or simple online tools to keep their records organized. As your business grows, it will make sense for you to invest in a more sophisticated accounting solution or hire an accountant to meet your business needs. Even though you have a tool or an accountant to manage your financial records, you need to have a working understanding of the details in those records and continually review them.

We will work hard this week to keep separate accounts and to avoid the common mistake of getting so busy with business tasks that we get careless with critical, daily record keeping.