How do you pay yourself? Small biz 101.?

Question

Hi Everyone,

I have been a professional dog walker for approx 6 years now. I have one sub-contractor.

I have a savings / every day account (with a $500 overdraph), a business account which is my cheque account, a progress saver (which never has anything in it), and a Visa debit account (which I only really use for only purchases etc).

I don't know how to organise my money. Most of my clients pay me via direct deposit, and cash.

Basically once my weekly bills are paid and Ive paid my contractor, i have bits of money fluffing about and there is no real order or control on how my fiances work.

I usually just spend all the money as it comes in and I don't really set anything aside as 'business' and 'personal/spending' money.

Thanks for your help!

How do i go about sorting this out? Where and how do I begin?

Answer 1

Keep your business accounts and personal accounts separate. Use your cheque account as your business account. Set up two direct transfers (weekly or fortnightly, whatever is best) from the account into your personal account. One can be your wage which goes into your personal account that you pay your bills and your personal stuff from. The other should go into a savings account - this way you never see the money and it goes in directly and there's no temptation to spend. I like the ING saver account. You can only transfer into it via your bank account and can't access it without 24 hours notice to transfer the money back into your personal account. Very good if you can't trust yourself to not dip into your savings. Also excellent because on this account interest is calculated daily and is at a high rate. So you're earning interest on your interest! So then you will also have a small balance (which you need to work out how much you need) sitting in your business account for any work expenses. It's important to keep all of these things separate.