How to transition from mixed personal and business to separate personal and business budgets?

Hello YNABers!

I've been using YNAB for a couple of years and I have a small business. I'm ashamed to admit it but I've kept my personal and business budgets mixed in YNAB (and the accounts mixed in real life too). I'm wanting to make things cleaner and separate my personal and business budgets in YNAB (and the bank accounts of course too). I do have my business expenses as a category group in YNAB (with sub-categories for all the expenses).

I've seen posts and articles about starting a business budget in YNAB, but it seems like those guidelines are for people starting from Day 1 in their business. I'm wondering if anyone knows of any resources/tools/articles for walking through the process of creating a new business budget and separating out the tangled mess that is a business and personal budget mixed together?

Thanks,

Elizabeth

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  • Hi! Good thinking, I was in similar shoes, except was using QuickBooks when I finally separated out my accounts. Once I discovered how well YNAB worked for me for personal, I got curious and ended up finding that YNAB changed the game for how I manage my businesses much more than how QuickBooks ever did (so that was a subscription I've happily canceled).

    I found this post from Jesse from 2012 to be a nice place to start, and he thoughtfully suggested starting fresh at a new quarter and just going with it from there. I started mine in July 2019 with YNAB and finishing out that year was a bit strange, but once I did and had a groove, it was much nicer to have 2020 all-in. So, it'll be strange however you start, but it'll get you on your way and you'll be glad for it once you're fully in, I bet.

    Good luck! I bet there's some folks here who might end up wondering what you do and how it goes, so looking forward to hearing your thoughts. 🙂

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  • Can you put a dollar amount to how much money you can and want to have in your business right now? Will you also open up a separate business banking account? If so, I would keep your current YNAB budget as your personal budget, keep all personal categories etc... Then I would make one transaction in your personal budget where you "spend" that amount of money to your business (with category "Business" or something like that) and in real life, send exactly that amount of money to your business bank account.

     

    Now I'd look at the business categories that you've had in your now-personal budget. Maybe they are already working well, and  you can copy them to a new budget you can create for the business. Maybe you want to set up things for the business budget somewhat differently than what you've done so far after learning about it for the last couple of years.

    In the personal budget you can now hide the business categories, they will no longer be used for your personal budget.

    You will take money out of the business to pay yourself, right? You can send yourself a regular "paycheck" if you want, or you can take out money whenever you need it personally or whenever you complete a project and get paid. You'd have to think about how you want to do that, but these are all options.

    If you do that, for your business account in YNAB it's an outflow (the category could be something like "owner salary" or "owner compensation"), for your personal account it will then be an inflow (with your note like "paycheck from the business", "business profit to use for my personal expenses" or whatever you'd like to call it). 

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