Tip No. 5: Control your Drawings

Businesses need working capital to maintain cash reserves to cover the cost of operations. If the business owner keeps taking excess cash from the business for their own private needs this will deplete the businesses capacity to pay its way. Set up a strict budget for the amount of money the owner needs to draw out of the business each week and avoid the temptation to take advances on business profits.

Remember that money taken out of a sole trader or partnership business by the owner will appear in the Balance Sheet not the Profit and Loss and this may make the business profits look better than they should be. Avoid using the business bank, credit card and petty cash accounts for private or personal use and try to stick within the budget that has been set.