Family Business & Money: How Much Info Should You Share?
The opportunity to build and sustain a business with your family is a special experience, but it can also be one of the most stressful when it comes to one aspect – money.
Read on for some suggestions that can eliminate disagreements and keep those family ties strong.
How much financial access should be given to each person?
Frankly, when it comes to information about business finances, transparency is key. Of course, there are certain matters that sometimes must remain confidential to protect the livelihood of the company, such as the details of proprietary designs, inventions, tools, recipes, or other creations that generate revenue. However, much of the time, trying to be secretive when it comes to money often leads to suspicion among family members. In order to avoid resentment in your company, be as open as you can about the financial aspects.
Is it o.k. to use business accounts for personal reasons?
One word: No. When you make money as a family, it is easy to justify using it for reasons unrelated to the business. However, this can lead to cash shortages for the company. Then, you not only have personal money issues but also ones involving the business, plus the blame from other family members. To avoid unnecessary dissension, establish policies at the inception of the business that determine the process for individuals to receive funds for personal reasons.
What if I have other questions about managing money in my family business?
Working with an experienced accountant can remove the burden of handling your own finances and offers a third-party perspective of what is – and what isn’t – helping your company succeed.