Separating business & personal money.

Mixing personal and business finances is the most common mistake small business owners make, and one of the easiest to fix.

Why it matters

• Clean records mean faster, less expensive bookkeeping, which saves you money
• Mixed accounts are a major red flag if you ever face an audit
• You can finally see your true business profitability
• It helps preserve the liability protection of your LLC or corporation
• Lenders require it when you apply for a business loan or line of credit

How to set clean boundaries

1. Open a dedicated business checking account and use it only for business income and expenses.
2. Get a business credit or debit card. Stop using personal cards for business purchases.
3. Pay yourself formally. Sole proprietors take owner's draws, recorded as transfers from business to personal. S-Corps pay salary plus distributions, coordinated with your CPA.
4. If you accidentally pay a business expense with personal funds, reimburse yourself from the business account and document it.
5. Never pay personal expenses directly from the business account.

If you are not there yet, no judgment. It is very fixable. We help clients sort through the history and set up clean going forward all the time.

I have been mixing accounts for years. Is it too late?

No. It is very fixable. We help clients sort through the history and set up clean going forward all the time, and there is no judgment in it.

What if I pay a business expense with my personal card?

Reimburse yourself from the business account and document it. The problem is not the occasional mix-up, it is leaving it unrecorded so nobody can tell later what it was.

Does mixing accounts really affect my LLC protection?

It can. Keeping business and personal money separate is part of what shows the LLC is a real, separate entity. That is a legal question for your attorney, but clean books are the evidence.

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