Mixing business with pleasure is never a good idea, especially when it comes to your business and personal expenses. How will you tell the difference between the two? How will you prepare your taxes? You’re asking for a logistical nightmare if you don’t create boundaries right away. 

It may sound more complicated to create two separate accounts, but trust me, as your business grows, you’ll be grateful you did so.

Even as a sole proprietor, you must keep your finances separate. It seems more difficult, but check out what can happen if you don’t: 

  • You won’t know how your business is doing – It sounds weird, right? How could you not know how your business is doing if you have the records in front of you? But if you mix your business and personal accounts, it’s impossible to tell upon first glance if your business is in the red or black. Wouldn’t you rather know right away and at all times how your business is doing? 
  • An IRS audit would be a nightmare – The IRS can audit you for three years AFTER the tax year. If your finances are mixed and the IRS comes after you in two years, how would you differentiate between the two accounts and give the right answers to pass the audit? 
  • Your personal finances would be at risk – If you don’t separate your personal and business expenses and accounts, creditors could come after your personal bank account, not just your business bank account. Consider setting yourself up as an LLC or a corporation, and definitely separate your accounts. 
  • You won’t build business credit – Eventually, you’ll want to get accounts in your business’ name, not just your personal name. How else do you get your business out there, earning its own financial reputation? If you don’t separate your personal and business bank account though, it’s impossible to establish your business with the credit bureaus. 
  • You won’t build a professional image – When you pay your bills or issue refunds, you want the money to come from your business account, not your personal account. How ‘boss-lady’ does it look to have your personal name on the check when paying a bill? I’m gonna need you to get it together boss lady.


Logistically, professionally, and financially, you must keep your personal and business bank accounts separate. Yes, it’s more paperwork and more to keep track of, but in the end, you’ll be glad you did it. Start with separate bank accounts from day one and you’ll find it much easier to stay organized and on track financially, both professionally and personally. 

And if you didn’t do it the right way from the start, no need to beat yourself up.  Go ahead and open that separate bank account, fund it, and begin to proactively use it solely for business.  Consider working with a bookkeeper who can help you sort and correct the old transactions.  All in all, it ain’t the end of the world.  Just choose today to begin doing it the right way.  

You’ve got this boss lady.

With love,


8 Easy & Effective Tax Write-Offs for Creatives & Service Providers

8 Easy & Effective Tax Write-Offs for Creatives & Service Providers

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