Welcome once again. Today let’s take a brief look at the subject of drawings. By drawings I mean moneys that the owner(s) of the business take from the business basically for private or personal use. It could be hard cash taken from the business, or physical goods in kind taken from the business, or in some cases personal expenses incurred on their behalf. Principally these are personal in nature and do not constitute expenditures for the business. Generally the bigger and more established businesses have in place systems and procedures to manage these, and normally it’s not a very big deal. Small enterprises however do not, and sometimes drawings can turn into messy things.
Different entrepreneurs have their own ways of dealing with drawings. There are also no hard rules of handling or managing drawings, and the principles that I’m going to provide below are guidelines. Of course, they are valuable guidelines that can help entrepreneurs manage their drawings well, and avoid as much as possible the negative impacts of drawings on the business, in addition to avoiding other related problems with tax authorities etc. So, what should an entrepreneur know about drawings? What are some of the tips regarding drawings that are valuable to an entrepreneur? Are there any useful guidelines that can help an entrepreneur manage his drawings from the business? Yes there are. Here below are some.
In conclusion, please take care of your drawing habit and culture. Drawings, if not well managed, can adversely affect your business. As a parting shot, I think you might also benefit from my blog entitled Bad money habits an entrepreneur must avoid. Enjoy this new week!
The Wise Entrepreneur