I have two kinds of business. I sell stationery and pants. Each business has it own capital. But I have trouble with the stationery business capital – some bad credits happened in the business. So, I have not enough money to buy new product.

Besides that, I have a big capital in selling pants. Should I use this capital to help the stationery business, or still keep it separate and seek a loan to improve the stationery business?

  • How formal is the business structure that you're operating under? If it's just two separate ways that you make money, then making this kind of transfer is not bad but it is worth tracking in case the stationery business model is not profitable. If you have actually set up independent business entities (LLC, Corp, etc.) for these, then that complicates the matter.
    – THEAO
    Dec 3 '13 at 8:49
  • for stationary it just a minishop. and for pants i sell it by order so zero loss.
    – nunu
    Dec 3 '13 at 9:39
  • 5
    Right... but how do you own the two businesses? When you file taxes, do you file your personal taxes with the businesses connected to yours, or do your businesses file taxes separately? Also, what country?
    – THEAO
    Dec 3 '13 at 12:56
  • in my country Indonesia there is no tax for minishop(home shop) its like garage sale. Both of my business is free tax.
    – nunu
    Dec 4 '13 at 1:38

Based on the additional comment you gave, I would recommend that you keep the capital from the businesses separate as much as possible.

It sounds like you won't get into any trouble legally if you make 'loans' or transfers of capital from one business into the other. But I would suggest that you keep detailed records of any transfers that you do make.

The reason why is that in any business, it is important to know the economics of how your business makes money. If you find yourself making transfers repeatedly, then your business model may be bad. Even if your transfers are only to deal with the cost of poor customers, it could still mean that your business model needs to be adjusted.

But if it's a question of the timing of cash flows, then there's really nothing wrong with taking some of the money from your successful pants operation and building up more working capital in your stationery shop.

  • that's right the important thing is the cash flow.
    – nunu
    Dec 5 '13 at 1:53

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.