How to Separate Personal and Business Finances (Even as a Solo Operator)
If you’re a one-person business, it might feel like you and your business are the same thing — especially when it comes to money. Swiping your personal card for supplies? Depositing a client check into your personal account? It happens all the time. But here’s the truth:
👉 Mixing business and personal finances is a recipe for stress, tax headaches, and missed opportunities.
Even as a solo operator, separating your money makes everything easier — and more legit. Here’s how to do it without overcomplicating your life.
Step 1: Open a Business Bank Account
This is non-negotiable if you want clean books and smooth tax prep.
What you need:
An EIN (you can get this for free from the IRS)
Your business formation paperwork (if you’re an LLC or other entity)
Your personal ID
💡 Pro tip: Even if you're a sole proprietor, you can still open a "Doing Business As" (DBA) account at most banks.
Step 2: Only Use Your Business Account for Business
Once your business account is open, stop using your personal account for work-related expenses.
Buy supplies? Business card.
Client pays you? Business deposit.
Need to pay yourself? Transfer funds from business → personal account.
That last one’s important:
Paying yourself is how you separate your income from your business income.
Step 3: Track Every Transaction
Use a bookkeeping system like:
QuickBooks Online (my go-to)
A spreadsheet (if you're just getting started)
Every time money comes in or goes out, it should have a label — income, expense, owner’s draw, etc. If you’re mixing accounts, you’ll constantly be guessing — and possibly double-paying taxes.
Step 4: Know What Counts as “Personal”
Here are a few common things you should never pay for with business funds:
Groceries
Rent or personal mortgage (unless you're taking a home office deduction)
Netflix, gym memberships, or personal trips
If you accidentally use the wrong card, it’s not the end of the world — just track it as an owner's draw or reimbursement. But the cleaner your separation, the fewer headaches you'll have.
Step 5: Keep Your Receipts
If you’re ever audited or just want to back up your books, receipts are gold. Use a simple system like:
Taking pictures with your phone and uploading to Google Drive
Using a receipt capture app like Hubdoc or QuickBooks’ built-in tool
Step 6: Pay Yourself Like a Pro
Instead of dipping into the business account anytime you need cash, set up a regular owner’s draw or transfer — weekly, biweekly, or monthly.
Even $200/week as a draw gives your finances structure and makes budgeting (for you and your business) easier.
Final Thoughts
You don’t need a finance degree or a team of accountants to run a clean, professional business — even if it’s just you.
Start by separating your money, and everything else — from tax prep to pricing to peace of mind — gets way easier.
Need help getting things organized?
I offer a free Bookkeeping Health Check for small business owners like you. I’ll take a look and help you get on track — no pressure, just clarity.
Click here to contact us or send us an email at David@Ruckandreconcile.com
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Thanks for reading!