A cautionary tale

I just listened to the YNAB podcast 131 My Semi-Annual review from 2014 and as I listened to it, it brought back a lot of (bad) memories of when I had my business. I won't rehash Jessie's story (you can listen to the podcast to hear that) but what came back was the fact that my spouse had no clue about the financial situation of my business.

I won't go into a lot of details but suffice to say it wasn't great. But every payday I took money from the business and deposited into our personal account so as far as my husband knew, things were fine. I was also handling all the finances (this was pre YNAB) and everything was recorded in Quicken but of course he didn't want to look at that. The business was managed in QuickBooks so he had no visibility on that.

The reality was that I was increasing my "business" credit which is really personal credit. I was paying employees and taking draws for myself. I told myself that was better because it saved in taxes. I didn't spend a lot on non-essentials like meals or tech toys but running a small business is expensive. The cost of annual mandatory software updates/purchases alone was a nightmare and as a small business (me + one employee), there is no economy of scale on that cost.

In the end, I came clean, closed the business, and went and got a job. I get paid poorly, making now what I made back in 1996,  but its better than the less than minimum wage I was making working my business.

The irony of all this is that I am an accountant. So I know better. But when its your own business and you are deep into the weeds, its hard to admit there is a problem. I am embarrassed and regretful of that time. And we are still paying for it financially.


All of that to say:

1. if you have a small business, put it into YNAB. The simplest way would be to create a category group for the business and that way its right there, out in the open. Or create a separate budget for the business but review it with you spouse as part of the monthly budget meetings.

2. if your spouse / life partner has a business, make sure you know what is going on. Make that person accountable as if you are on the board of directors. Make sure that the business isn't hiding expenses that should be in the personal budget.

3. if you have a small business, go listen to YNAB podcast 131. You may also see yourself.

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