5 Reasons To Avoid Co-Mingling Personal and Business Funds

This blog post was last updated on February 26, 2021.

Are you thinking about using your personal funds for growing your business? We all know how it goes – you swear that you’ll repay it in a few months when business is stronger, but even with the best intentions, it’s not always possible to foresee changing circumstances that might make that impossible. It can be safer for your personal finances if you avoid co-mingling personal and business funds altogether. Your bank account isn’t an endless source of capital, and your personal finances may suffer if you don’t maintain clear boundaries between your business and personal accounts.

Still not convinced? Here are five reasons you may want to keep your personal funding sources separate:

1. Lost Savings

We all have dreams, and our savings help us accomplish them. Whether you’re dreaming of financial independence or owning a beach house, co-mingling personal and business funds could mean that your savings diminish and you aren’t able to pursue those dreams.

You also lose financial security as your bank account shrinks and that could put you one financial crisis away from personal bankruptcy. Be smart and keep your business finances away from your personal savings account: you never know when you’ll need that money for an emergency.

2. Lost Assets

Liquidating your stocks and bonds or taking out a loan against your mortgage may feel like a sensible way to get a huge amount of capital quickly. But when you liquidate your personal assets to help your business, you’re only harming your personal finances (and nuking your net worth).

The fewer assets you have, and the lower your net worth drops, the harder you may find it to pursue financial growth in your personal life. You could find yourself having to start over from scratch.

3. Credit Card Debt

Another common way that entrepreneurs co-mingle their business and personal funds is by charging company expenses to a personal credit card. This can be complicated in a number of ways.

First, it can be difficult to accurately track those charges with business accounting software, so you may find that business charges never show up in your records unless you manually add them.

Secondly, it may be hard to repay your personal debt with business capital without needlessly complicating your finances even further, so you may end up dipping into your savings or using the Christmas bonus from your day job to pay it off, putting your personal finances even more into the red.

4. Lost Investment Opportunities

Every dollar you put into the business is a dollar that could be working for you and generating more money. Keep your investment accounts intact: they’re doing more good for you than pouring that same cash into the business would.

For instance, if you have $1 million in an investment instrument that pays a 4 percent return annually, that’s $40,000 a year simply for keeping the money in the account. Once you take out that million and use it for your business, it’s no longer generating interest; and you’re now indebted to yourself.

5. Lost Retirement

There’s a reason that financial advisors tell you to start saving for retirement as early as possible: it takes a lifetime to save up enough money to coast through retirement worry-free. Once you start dipping into your retirement account, you’re slowly eroding the foundation that you’ve built your retirement upon. You may not have the income or the time to rebuild it, and you could find yourself retiring later and working harder.

Fund Your Business Expenses the Right Way

If you’re convinced by now that co-mingling personal and business funds isn’t the way to go, you’re probably wondering if there’s an alternate solution. The solution to your problem is simple: you can build a relationship with a business lending partner and get the funds that you need to turn your business around fast.

When you choose a lending partner like Mulligan Funding, you’re getting expertise and compassion, not just access to capital. You also get approval within a few hours and funding as soon as the next business day, manageable repayment terms, and flexible funding options to ensure the process is as seamless as possible*.

Depending on your current business needs, you may find that a working capital loan offers the help that you need.

Check with Mulligan Funding, where an expert is happy to guide you through the lending process.

Don’t jeopardize your financial independence and your retirement. Keeping your finances separated may be your best choice for the long term, and you have options when it comes to finding the business funds that you need.

Call Mulligan Funding at 855-326-3564 to discuss your financing options today!

The information shared is intended to be used for informational purposes only and you should independently research and verify.

Note: Prior to January 23, 2020, Mulligan Funding operated solely as a direct lender, originating all of its own loans and Merchant Cash Advance contracts. From that date onwards, the majority of funding offered by Mulligan Funding will be by Loans originated by FinWise Bank, a Utah-chartered Bank, pursuant to a Loan Program conducted jointly by Mulligan Funding and FinWise Bank.