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A Practice That Will Keep You Sane


Are you a numbers person?  I’m not.  Keeping track of finances is one of my least favorite things to do. But, as a small business owner, numbers person or not, there is no getting around the bookkeeping and accounting aspect of owning and running a business.  If you’re like me you wish to keep your business as simple as possible, and yourself financially sane. So, I cannot stress enough the benefits of keeping your personal and business finances separate. 

Many small business owners may start out using their own personal account.  A sole proprietor is the one case where there is no need to keep a separate account.  Yet, I still recommend it.  As the business grows things can get messy.  Read on and discover four benefits of keeping your finances separate. These, I believe, will help to keep your business straightforward and your mind at ease.

Four Benefits of Keeping Separate Business Accounts


Yes, it is true, that as a small business owner you will want to save money where you can, especially if you are just starting out. While it may seem cost-effective to have only one bank account, there is something to be said about saving time and energy.  Imagine your checkbook and bank statements if you have kept your personal and business finances together.  As time passes there is the possibility that it will become difficult to distinguish between business and personal expenses.

By separating your accounts, it becomes easier to get an accurate picture of your business cash flow.  A monthly statement from your business account will give a clear picture of expenses, revenue, and earnings.   Keeping your financial records in a lightweight, user-friendly ledger program like Pro-Ledger Online can also help.

 In addition,  a separate business account can provide you with options that a personal bank account may not have.  For example, you may wish to be able to accept credit card payments or checks digitally.  Furthermore, you may want to have a business checking account and display your logo on your checks. 

Finally, you may want to have a business credit card that will enable you to establish and prove your credit history.  This will increase your chances of a loan should you need one.  A bank will want to see your business financial status, not your personal.  Clean and Clear bookkeeping is the way to go.


Benefit 1 naturally lends itself to benefit 2.  Determining how much your business will have to pay in taxes is no easy feat.  As an owner, it is your responsibility to provide an accurate record of your business finances.

It is crucial that you can account for every transaction and receipt. This becomes a huge task if your personal and business finances are mixed.  When personal and business finances are separated the process becomes much simpler and saves considerable time.

Furthermore, calculating your business deductions becomes simpler.  You will want to be as accurate as possible since these deductions save you money. Business coach  Lilach Bullock,  clearly states that separate bank accounts will reduce the amount of tax you have to pay.  Separate bank accounts will save time and money, and who doesn’t want to do that?


Yes, it is possible that your business may never be audited.  Yet, it is probably safer to allow for the expression, “It is not a matter of if you will be audited but when.”  Mixing your finances will probably open you to a nightmare if audited.  You will more likely be open to questions and asked to justify your personal income items (that could have been deposited 4 to 5 years ago). 

Having separate personal and business accounts will lend itself to a simpler audit since you will likely have a clean record to present (be sure to keep your invoices and receipts as backup).  If bookkeeping is not your strong suit (organizing receipts/invoices is overwhelming) you can refer to my blog entitled “Organizing Receipts Got You Down?” 


As a small business owner, it is important to be taken seriously.  You have a service or a product that you believe will make a difference in the lives of others.  To effectively deliver this, you have to be professional and legitimate. 

Believe it or not, having a separate business bank account will help you achieve legitimacy.  For example, your business name will appear on invoices, checks, and your credit card.  This establishes that you are reputable/credible. In addition, it builds your brand equity.  Together these benefits enhance your professional image.  Furthermore, separating your personal and business accounts simplifies matters for customers, vendors and alluded to earlier your accountant.

Whether you are a numbers person or not, keeping your personal and business finances separate is a wise decision.  Not only will it save you time and energy, but it will establish your business as credible and professional.

Pro Ledger Online offers a cloud-based bookkeeping solution for small business professionals.
Click here for a 30-day free trial. – “Bookkeeping Made Simple” 


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