Stop Mixing Your Money
Recently there’s been a bit of flap where I live, about some charges on the school district’s credit card account. A concerned citizen requested copies of the bills, and now the $1500 hot-air balloon ride, the cooking school classes, the groceries, the monthly Netflix fee have raised a lot of questions.
“We don’t know if there is fraud,” per a quote in the local paper. “[The school district] has made their bookkeeping so confusing and opaque it’s hard to figure out if there is fraud, but without a doubt there is a huge amount of waste and lack of transparency.”
Of course this immediately reminded me of all the times I’ve urged the separation of funds, and alllll the many times I’ve seen those Netflix and groceries and obviously personal expenses go by on clients’ business accounts. Ok: you’re not a suburban school district caught in the cross-hairs, as in the story I’m quoting. Hopefully no one in the PTA has their eagle-eye focused on the details inside your finances. ;> But still: if you’re a business owner, you should be just as worried about the interpretation your use of business funds potentially gives rise to, and the messy mix-up it can perpetuate.
Tough love, friends: Quit mixing your money.
I know: It happens, I get it — sometimes we all pull the wrong credit card out of our wallets at Trader Joe’s. Sometimes, long ago, we input the wrong account number when we set up an auto-charge on-line and then forgot to change it, so that Uber pizza deliveries are still running through the biz card. And sure, sometimes we’re trying to hide a personal birthday gift purchase from the bright inquisitive eyes of the designated finance person in our household.
But mostly, mostly, we’re subjecting our selves to that “huge amount of waste and lack of transparency,” and we’re putting ourselves, in every way, in totally unnecessary jeopardy. Cue the usual warning here about piercing the corporate veil.
Please Don’t Commingle.
If any of this sounds familiar — if you’re doing this, you are far from alone! — make a plan and get yourself out of this sitch.
- Leave your biz credit card out of your wallet, so you don’t accidentally (on purpose) use it.
- Review the personal expenses getting charged to business accounts (ask your bookkeeper to make you a list!) and move anything personal to a personal source of funds. You can do this in one fell swoop or tackle it little by little, but DO IT.
- And — most common source of funds-mixing! — if your business is not paying you on the regular or not able to pay you enough, so that you’re taking your pay in stuff (i.e,. in groceries, meals, shoes, what have you), do let’s talk about how to make the changes needed to move on from there. Is it your pricing? Is it your spending? Is it a little bit of both? Let’s talk.