How to Separate Personal and Business Finances: A Simple Guide for Entrepreneurs
If you're running a business—even a side hustle—mixing personal and business money is one of the fastest ways to lose control of your finances. At Lionhood Financial Coaching, we’ve helped countless entrepreneurs clean up their books and reclaim peace of mind by doing one simple thing: separating personal and business finances.
Here’s how to do it—and why it matters.
Why You Need to Separate Personal and Business Finances
Keeping your business money separate isn't just about staying organized. It’s about:
- Protecting your legal liability
- Simplifying tax time
- Building business credit
- Tracking profitability accurately
- Getting ready for funding or loans
If you're serious about your business, this isn’t optional—it’s foundational.
Step 1: Open a Business Bank Account
This is your first and most important move. Choose a bank that offers:
- Low fees
- Online access
- Business debit cards
- Integration with accounting tools like QuickBooks
Pro Tip: If you’re a sole proprietor, you can open a business checking account under your name using a DBA (Doing Business As) certificate.
Step 2: Get a Business Credit or Debit Card
Use your business card for business purchases only—supplies, subscriptions, advertising, etc.
Avoid the temptation to use it for gas, groceries, or personal bills. Clean transactions make bookkeeping (and taxes) so much easier.
Step 3: Pay Yourself a Set Amount
Instead of transferring money randomly, pay yourself like an employee—weekly or biweekly. This creates clear lines between your personal income and your business earnings.
Start with a set draw or salary. You’ll thank yourself when it’s time to budget or apply for a mortgage.
Step 4: Track Income and Expenses Separately
Use software like:
- QuickBooks
- Wave
- FreshBooks
Or, if you’re just starting, even a simple Excel sheet works. The goal is clear: every business dollar in and out should be accounted for.
Want help setting this up? Our Mastering Financial Management: Why QuickBooks is Your Essential Tool blog post walks you through it.
Step 5: Hire a Bookkeeper or Use a Coach
When you’re ready to grow, don’t try to DIY forever.
Lionhood Financial offers virtual bookkeeping and financial coaching designed for minority-owned businesses, side hustlers, and solo entrepreneurs. We’ll help you stay compliant, profitable, and focused.
Bottom Line
If you’re building a business, act like a business owner. Start by separating your finances, and you’ll instantly feel more confident, professional, and in control.
Want help getting your business finances in order? Schedule a free consultation with Lionhood Financial Coaching today.