Separating business and household finances.

By Wangui Nzele.

8th July 2023.

Hello!

First, thank you so much for taking the time to read this blog post.

This one is for my entrepreneurs, business owners, freelancers, content creators and consultants. 😊💛

Some time in April I was honored to train a group of entrepreneurs from 'Somo' which is a non-profit organization that trains and invests in entrepreneurs.

I was soo grateful, honored and excited to sit, share and learn with business owners like myself. When preparing for and training the group, I felt so reassured in what I am trying to do with Finance On Command. That sense of purpose, joy and fulfilment in my work.....yeea, I felt that.

That being said…. Hit me up via email financeoncommand@gmail.com for group & individual training and consultation sessions in personal finance, business finance and entrepreneurship.

The training was on Household vs Business Spending.

This topic is especially for businesses that are starting out, when you are trying to figure out if and how to separate your personal and business finances. Also for content creators, freelancers and consultants, this is great for you, simply because, whether your business is a one man show or huuuggee, YOU SHOULD SEPARATE BUSINESS AND PERSONAL FINANCES.

There was definitely a lot of value shared and I’d like to share some of that with you.

Sooooo…. In the training, I took the group through personal and business spending individually; definition, importance of understanding and strategies of the spending for each of the two. Then we compared the two, what are the similarities and differences? Then finally, what I will briefly share….the star of the show, what we are all here for, Separating business and household finances.

How to separate business and personal finances.

1. Have separate budgets and track the accounts separately.

2. Have separate accounts. Different cash wallets, M-pesa accounts or bank accounts (make use of mobile and online banking).

3. Pay yourself a salary or get paid a fixed amount per period from your business. This is better than paying for your personal expenses from the same account as where your business funds are.

Importance of separating business and personal finances. 1. Financial clarity and planning: Separating your business and household expenses will help you keep track and plan for your income and expenses for each area of your life and avoid confusion and potential financial errors. By tracking your expenses separately, you can more accurately identify areas where you may need to cut back or invest more, and make better decisions about how to allocate your financial resources.

2. Tax purposes: Separating your business and household expenses is essential for tax purposes. By keeping separate records for each, you can more easily identify which expenses are deductible for your business, and which are not. This will help you reduce your tax liability and avoid potential penalties from KRA.

3. Liability protection: Separating your business and household expenses can also help protect your personal assets from business liabilities and vice versa.

4. Financial records for business investors.

Challenges and solutions to balancing household and business spending. Challenges include; limited resources to allocate to both areas of life, lack of financial planning, limited financial understanding, mixing personal and business expenses.

Solutions; - Always strive to improve your business and finances at large. This is by putting in the work and learning (financial literacy). - Take time to analyze and plan your finances. Separately. It saves you so much time and money in the long run.

Hope you have gotten some value from this blog post.

Be sure to read another blog post here, send me an email with any inquiry here, or even better, check out our amazing informative content ( If I do say so my self) on Instagram here.

To wind up, here is feedback I got at the end of the session.

Thank you for taking the time,

Byeee.