Your personal financial affairs or status as the owner of the business are a direct reflection of the financial health and status of your business. The concept behind conducting financial reviews is to assess spending habits and determine whether or not a person’s spending habits are likely to compromise their financial well-being. As the business owner, your financial habits are likely to impact the financial situation of your business and as such, a financial review aims at pointing out and mitigating or addressing risky financial practices exhibited by the owner.
Further, a financial review helps identify financial areas that need adjustment and financial habits that need to be eliminated. Markedly, it is important to improve your personal financial position as a business owner due to the fact that a poor personal financial position is likely to impact your business’ financial position negatively. The first step in reviewing your finances is establishing your net worth and frequently tracking it.
This checklist is a guide for conducting reviews of your personal finances as a business owner.
Part 1 – Reviewing Personal Finances
1 Are your trust distributions made properly?
2 Is there a review of personal loan agreements with your business?
3 Do you have outstanding debts?
4 Have you undertaken tax and personal financial planning?
5 Have you set structures for the protection of your assets?
6 Is your personal credit score intact?
7 Do you have structures for your retirement plan?
8 Are your personal accounts separated from business accounts?
9 Is there allocated salary for the business owner?
10 Do you have a business bank account that is separate from your personal account?
11 Are your personal and business receipts separated?
12 Is the business providing protection against liabilities and taxes?
13 Have you drawn up management and ownership agreements?
14 Are your tax payments separate from that of the business?
15 What is your debt-to-income ratio?
Part 2 – Improving your Finances
16 Do you have debt consolidation strategies?
17 Are there plans for restructuring and reducing personal expenses?
18 Have you consulted a professional?
19 Do you have a personal budget?
20 Do you practice healthy spending habits?
21 Is there an emergency fund for your personal expenses?
22 Do you have a personal investment strategy separate from your business?
23 Are you leveraging tools such as Personal Capital to monitor and track your finances?
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