Separating business and personal money
It is the single change that makes every other part of your accounting easier. It is also the one owners postpone the longest.
When one account pays for groceries, supplier invoices and a new phone, every transaction needs a decision before it can be recorded. Multiply that by a few hundred transactions and the books fall behind.
Start with one account
Open a bank account used only for the business. All sales go in, all business expenses go out. Nothing else.
Pay yourself on purpose
Instead of drawing cash whenever it is needed, set a regular amount and transfer it on a fixed date. Your personal budget becomes predictable, and so does the business's cash.
Keep a clean trail for mixed costs
- Pay shared costs such as a phone plan from the business account and note the business share.
- If a personal card is used for a business purchase, reimburse it from the business account with the receipt attached.
Separate money is the difference between books that explain the business and books that need explaining.
This article is general information for business owners, not professional tax or legal advice. Requirements change; confirm the details that apply to your business with a qualified accountant.