One of the most common mistakes business owners make when they’re struggling financially is using their own personal funds to keep the business afloat. It feels natural — after all, you’re the owner, and you want to pay your employees, your vendors, and keep the doors open. But once your business enters the zone of insolvency — missing loan payments, falling behind on credit cards, or struggling to pay bills on time — every dollar you put in could be digging a deeper hole.

Why You Should Pause Before Using Personal Funds

You’re likely paying yourself last. Most owners prioritize employees, vendors, and banks before taking anything home.

You may be risking your future. The worst mistake you can make is tapping into retirement savings to fund the business. In Georgia (and most states), your 401(k) and IRA contributions are 100% protected from creditors. Once you withdraw those funds, they are no longer protected — and if the business still fails, that money could be gone forever.

What to Do Instead

If you find yourself putting money into the business more than once just to cover payroll or cash flow, it’s time to talk to a restructuring attorney. You may have better options, like filing Chapter 11 to reorganize and deal with debts while keeping your business running. Your retirement savings should be a last resort — and most of the time, you should avoid touching them altogether. If you’re even thinking about pulling money from retirement to fund the business, that’s an emergency situation. Get legal advice immediately and understand your rights before making a decision that could jeopardize your financial future.