Running personal and business money through one account feels simpler. It costs you in three specific ways.
You lose deductions
At tax time, separating a year of mixed transactions is slow, and anything that cannot be identified confidently does not get claimed. Deductions you were entitled to are quietly left behind.
You weaken liability protection
If you formed an LLC to create separation between yourself and the business, running everything through one account undermines exactly the separation you paid to create.
It costs time and money
Whoever prepares your return has to untangle it, and that work is billable. Separate accounts turn hours of reconstruction into an export.
What to do
- 01Open a separate business checking account. Most banks offer simple options for small businesses.
- 02Get a separate card for business expenses.
- 03Pay yourself deliberately — a transfer from business to personal — rather than spending from the business account directly.
- 04Never pay a personal expense from the business account, even once, even if you intend to repay it.
- 05Keep receipts, digitally is fine.
- 06Reconcile monthly rather than annually.
If you have been mixing accounts, start separating now rather than at year end. A clean second half of the year is far better than nothing, and the habit is what matters.
We can set the bookkeeping up
Accounting and bookkeeping are part of what we do. Call (432) 257-7547 or come by 700 C Andrews Hwy in Midland. We work in English and Spanish.
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