Getting personal transactions entangled with that of the business transaction is something most farmers and agripreneurs do, and it may come easy. However, this poses a risk to the business, and more importantly leads to lost opportunities in business growth.
For agribusiness owners who are predominantly used to farming traditionally, this is innate. With evidence of the business potential in agribusiness, it is imperative that we treat all agribusinesses with utmost importance, and understand all the aspects which contribute significantly to the bottom line (profitability).
Separating the personal accounts from the business accounts is one crucial aspect of every agribusiness.
Transacting separately will streamline cash flow, and make record-keeping much more efficient and readily available for financial statements and tax submissions, as well as protect you from personal liability.
Now that we have reiterated the importance of separating personal transactions from that of the business, I would like to elaborate further by stating a few tips on how to get started. It is never too late to start doing the right thing which will benefit you and your business significantly in the long run.
So, how do you actually separate the personal account from that of the business?
1. Select your business type, and register the agribusiness accordingly.
2. Open a business account, with its own debit banking card.
3. Compile a budget for your business, and monitor the budget monthly.
4. Ensure that all your business transactions are recorded accordingly.
5. Create a file specifically for your business receipts, and all the farming financial supporting documents.
6. Ensure that everyone who handles the business accounts, be it your family or partner, understands how you transact your business activities.
7. As a business is a separate entity, ensure that the business pays you a salary to avoid taking funds from the business when and how you please.
8. Finally, it is essential that you understand what is deemed as business expenses.
9. For assistance and support, get in contact with a financial professional.
Let’s operate farming activities with intention, let’s maximise the agribusiness potential and most importantly, let’s farm for profit.
*Mekupi Kambatuku is a Managing Consultant at Simpli Business Advisory, and can be reached at admin@simpliadvisory.com.