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Transcript
Separating your business and your personal finance is very important because if you mix them, this will provide you with wrong information for your business and with wrong information you will not make good decisions. It can also make you fall into some legal contingencies. So we need to separate them from the beginning. Think for example taking cash from your business drawer for your personal expenses, this could lead to some liquidity problems for your business. Also if you include some of your personal expenses in your business, this will lead to smaller profit for your business. So it is very important to separate them from very early on. It is important to know that all banks want your business, so there is a lot of factors to consider when you’re choosing a bank. And this will depend on the industry you are in, who you are working with. So some of the things you may look at are online features, if they have a minimum balance requirement, if they have fees for maintenance, if they have good interest rates for future loans that you want to consider, if they have partnerships with other banks, if they have fees for bank-to-bank transfers. So you might want to look at who you’re working with, who your clients are, your suppliers, your creditors, and who you’re going to be paying to in order to make a very informed decision of which bank you want to work with.
There are two types of cards that you can get from a bank. One is your debit card, and one will be your credit card. The debit card is cash on hand that you have already earned. So you keep it in your bank’s balance and you will use it as you dispose to pay for invoices, or for different things that you will have programmed. Your credit card needs to be treated to establish good credit. So if you get something on credit, you immediately pay it off with your debit and that way you have a good credit score. It can also provide you with short-term liquidity in the sense that if you don’t have cash right now, but you will in the next few days or the next week, you can use your credit to pay for that. It is important to have a mentality that is only a short-term fix for that problem because you do not want to fall into a credit problem. So be very careful when using your credit card.
