We start businesses, whether nano, micro or small to help our personal finances. Along the way we are confronted with a stark reality, the need to separate our business finances from our personal finances. The fortunate learn this through advice and observing others while the unfortunate must learn this lesson through bitter experience.. no matter which way you end up here this one of those lessons that once you have learnt it you must spring into action to apply practically in your life.


For many, the small business they own and they are really the same things. When the business needs an injection, it comes from you. You are not just an owner but also a representative of the business. So it really isn’t a bad idea for money to go both ways? Right? Well before you know it either business, yourself or both suffer as a result of this behaviour. The business requires an investment from you to start but it also needs continuous investment to grow. If you pluck the leaves and stems there will be no fruits to eat.

Separate entity

The first thing you have to get right is that your business is a separate entity from you. If this is not the case make it so starting today. Make sure that all invoicing and receipting is done in the business name. If you must inject cash into the business from your own pocket make a record of this. Every single transaction. And the same goes for the other way. Separating yourself from your business starts in your mind.

Separate accounts

The next step is to use separate accounts for yourself and your business. This isn’t quite easy. If you cannot get an account in your businesses name then using a separate account in your name solely for business helps. This gets a little more complicated in mobile money where you can o ly have one account in your name per provider. Consider registering the business to allow you to register mobile money and bank accounts in its name. When you have to use money from the business make sure to transfer it to your own account first. And if you worried about the charges that are your reminder that you probably shouldn’t be doing this in the first place.

Financing for Working Capital

Some businesses are more working capital intensive than others. I’ve operated in food and catering which is extremely working capital demanding. If you are in a similar type of business consider arranging working capital or order finance arrangements to help your business in these times. It is no use leaving yourself in dire straights to support a business that needs you. If things go wrong, and they often do, now you are unable to help the business out and it can’t help you. You can create a DIY version of this or a formal arrangement but it is worth it. If your business or orders are not profitable enough to make loan repayments, you may want to rethink this business thing.

Receipts and records

On the balance of probabilities, a system is only as good as its record keeping. Without solid records of transactions between yourself and the business, you run the risk of not being aware of what is going on. When I try to advise people on this they tell me that the bank or service provider keeps track of all the transactions anyway so they don’t need to. Needless to say, come time to prepare business accounts they are running around like a headless chicken trying to understand what is what. Keep records. Because records will help you measure things and keep track of movements.

Tight Admin and Internal control

Finally, you need to establish tight administration practices and internal controls. These terms sound very technical but I assure you these are simple things. The administration is essentially the record-keeping mentioned earlier. The best time to record a transaction is when it happens. The second best time is straight after it has happened. Internal controls are systems that are designed to guide behaviour toward compliance with a set standard. Using separate accounts, separating the business from yourself, invoicing and receipting in the business name. These practices will help establish the business as separate from you and get you started on separating personal and business finances.

These practical steps will get you started on the road to separating your personal finances from your business finances. They are not a silver bullet but practised over time they will deliver you to the point where you can stand separate from your business.