Two businesses, both providing very similar services and both sharing the same managing director. No problems there…until that managing director makes the potential mistake of not keeping the businesses completely separate.
A failure to understand why two separate businesses should maintain strictly separate accounts is a common cause of financial problems for otherwise successful operations. Even something as simple as utility bills for your premises need to be registered in the right company for that business. It’s the only way to protect one business if the other begins to struggle to ensure there isn’t a domino effect on the successful business.
For those people setting up multiple businesses, the particular area of concern is that borrowing from one of your businesses to shore up the other - it might seem like a quick fix and one that can easily be rectified when the crisis moment is passed but it can also be a contagion that spreads very quickly in all directions.
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