Running a business comes with freedom, fulfillment, and flexibility, but also financial complexity.
Unlike salaried workers, small business owners have to think about everything from cash flow and taxes to retirement and insurance. If you’re not careful, it’s easy to pour everything into your business and forget about your personal financial future.
That’s why a solid financial plan is non-negotiable.
Whether you’re just starting out or already in growth mode, here’s how to get your personal and business finances working together, so you can build wealth, not just revenue.
1. Separate Your Business and Personal Finances
Photo by Adeolu Eletu on Unsplash
This might sound obvious, but it’s one of the most common mistakes small business owners make.
Open a dedicated business bank account, use separate cards, and track business income and expenses clearly. This not only makes tax season easier but also helps you understand exactly how your business is doing.
It also protects your personal finances from business liability, especially if your business is structured as an LLC or corporation.
2. Pay Yourself a Salary
A lot of small business owners either don’t pay themselves at all or take random amounts when cash comes in. Both can lead to budgeting problems and burnout.
Treat yourself like an employee. Decide on a reasonable salary based on your profits, and pay it consistently. This creates stability in your personal finances and keeps you disciplined about business spending.
3. Create a Business Emergency Fund
Just like you need an emergency fund in your personal life, your business needs one too.
Aim to save 3-6 months’ worth of business expenses in a separate account. This will help you weather slow seasons, unexpected bills, or client delays without panicking or going into debt.
4. Budget for Taxes All Year Round
Unlike employees, you don’t have taxes automatically deducted from your income. That means it’s on you to set money aside, and if you don’t, you could be hit with a large bill you’re not prepared for.
A good rule of thumb is to set aside 25–30% of your income for taxes. Work with a tax professional who understands small business needs, and make quarterly payments if required in your country.
5. Invest Outside Your Business
Photo by Maxim Hopman on Unsplash
It’s tempting to keep reinvesting everything back into your business, but that’s risky. Your business is just one asset. You need other income sources too.
Consider building a portfolio that includes:
- Dividend-paying stocks
- Bonds or fixed-income options
- Real estate
- A retirement account (more on that below)
Investing helps you build long-term wealth… whether your business thrives or not.
6. Plan for Retirement (Yes, Even if You’re Young)
As a business owner, no one’s funding your retirement for you, so it’s your responsibility to do it yourself.
Look into retirement plans available for entrepreneurs in your country (e.g., SEP IRAs, Solo 401(k)s, or other self-employed pension options). Even small, consistent contributions make a big difference over time.
7. Protect Yourself and Your Business
Unexpected events can derail everything if you’re not protected.
Consider:
- Health insurance
- Business liability insurance
- Disability and life insurance (especially if you have dependents)
- Legal protections (contracts, NDAs, etc.)
These may seem like extra costs now, but they can save your business and family from financial disaster.
8. Work With a Financial Advisor Who Understands Entrepreneurs
Not all financial planners get the realities of running a small business. Look for someone who understands variable income, growth cycles, and exit strategies.
They can help you build a plan that balances short-term needs with long-term wealth, so you’re not just making money, you’re keeping it and growing it.
Final Thoughts
Being a small business owner gives you incredible potential, but it also requires intentional planning. When you manage both your business and personal finances strategically, you can enjoy the freedom of entrepreneurship without sacrificing your financial future.
Want to take your financial game to the next level?
Grab my Level-Up Your Financial Life Course—designed specifically to help you build lasting wealth, create passive income, and plan for life beyond the business.