Mixing personal and business finances is a common mistake that can lead to serious tax and legal issues. Here's why separation matters and how to do it right.
Legal Protection
Separate finances help maintain the corporate veil, protecting your personal assets from business liabilities.
Tax Benefits
Clear separation makes it easier to track business expenses and maximize deductions while avoiding IRS red flags.
How to Separate
- Open a dedicated business bank account
- Get a business credit card
- Pay yourself a salary
- Keep detailed records
- Never mix transactions
Best Practices
Establish clear boundaries from day one. Even if you're a sole proprietor, treat your business finances as separate from your personal finances.