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3 Dangers of Mixing Personal and Business Finances

It’s a known fact that mixing personal and business finances is a recipe for disaster. It can lead to incorrect accounting, draining of personal savings, and excruciating difficulty when it comes to filing Pakistan taxes.

On top of all that, but billing business expenses to your personal account can throw off your business valuation. It will show misleading information about your financial health, and most investors will be unwilling to put their money into such a messy financial situation.

As if you needed any more reasons to keep separate bank accounts for your personal and professional expenses, here are the major dangers of mixing funds.

  1. Inaccurate Financial Statements and Bookkeeping

It’s understandable to bill business expenses to your personal account in a pinch, but making a habit of them will throw off your bookkeeping records. It will paint an incorrect picture of your Pakistani businesses financial health, and will call investors into question where the extra money is coming from, once they perform their due diligence and get to the bottom of your financial position.

  1. A Tax Filing Nightmare

Unless you are keeping a strict track of all your receipts and incoming and outgoing cash, it will be a nightmare to file taxes when your personal and professional finances are mixed up. Categorizing those expenses will be a time-consuming and frustrating process, and it may cause you to file inaccurate Pakistani tax information.

  1. Less Time to Focus on Running Your Business

There will eventually come a time when you cannot ignore your accounting and financial records anymore. You will have to go through the books and sort through your personal expenses, apart from your corporate expenses. This will become an extremely taxing and time-consuming process, which will take away from the actual management and operations of your business.

  1. Losing Track of Who to Reimburse 

At some point, your partners or investors will come to you waving receipts, asking to be reimbursed for payments that they made from their personal funds. It will become complicated to track all these reimbursements, and can cause bitterness between business associates. The bottom line – it will not be worth the heartache and trouble.

The simplest accounting and business finance app in the world!

Metric is the easiest way to make sure you are tracking the finances for your business, and keeping them separate from personal finance! With extremely simple inputs, you can start using Metric on Day 1 of your business, all the way up to 50 employees easily!