Could Personal Finance Damage Your Business?

Could Personal Finance Damage Your Business?

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Businesses and their laws and regulations have always evolved to protect the owner of those businesses, the idea being that someone should be able to run, succeed or fail in business and not have their entire life compromised. However, in times of pinched economic circumstances, many personal accounts are feeling the squeeze. There are numerous things to do to keep your business successful – for instance, 2018 is set to further emphasise the importance of a super marketing strategy as we become closer to customers through voice recognition and augmented intelligence.

The question is, will this impact on your business? Even those with the best business strategy and plans can fall foul of the psychological effect of money pressures. Your personal finance situation can be detrimental to your business; this article will show you how and how to avoid it.

Business Regulation

The primary way in which businesses distinguish between personal and business holdings are via the type of company. Sole traders are one and the same as businesses, for legal purposes. Partnerships are spread amongst many people. LLCs are individual, and LLC losses aren’t personally enforceable. For you, this means the type of business you run may impact your personal income – and vice-versa. Crucially, different banks may treat you differently. For personal loans, for example, it pays to read reviews and make sure that your lender’s policy with regard to business vs personal finance is coherent.


Depending on the quality of your credit score and finances, you may have offered your own assets or capital as a guarantor or collateral for loans. This is often how many businesses get off the ground, as an absence of a lending history means business lenders require personal assets to secure finance. This can be beneficial if you are on solid foundations, or problematic; particularly if you lose those assets due to adverse personal circumstances, or if your business makes large losses.

Poor Credit and Reputation

Finally, if you have a chequered history of lending or selling behaviours – particularly on the internet – you can suffer from a reputation in the eyes of other buyers, online liaisons and business lenders. It is important to keep your conduct when at a sole trader or low level business up to scratch as your own personal interventions could spell disaster further down the line when you own a bigger business.

So, financial situations certainly can impact upon your ability to conduct business. However, there are plenty of ways to mitigate this threat and with due diligence throughout your life you will be able to perform fine.

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