Separating Your Business Money From Personal Funds

Separating your business money from personal funds is essential for financial clarity and legal compliance. Here are practical steps to achieve this:

1. Apply for an Employer Identification Number (EIN): Obtain a unique nine-digit EIN from the IRS. It serves as your business’s identifier and helps separate it from your personal affairs .

2. Establish Your Business Entity Type: Form an LLC or corporation (if applicable). This legally separates your business from you as an individual.

3. Open a Business Bank Account: Set up a dedicated business checking or savings account. Use it exclusively for business transactions, such as paying bills, collecting payments, and managing expenses

4. Get a Business Credit Card: Having a separate business credit card simplifies tracking expenses and builds business credit

5. Pay Yourself a Salary: Regularly transfer a fixed salary from your business account to your personal account. This helps maintain clear boundaries

6. Separate Receipts: Keep business-related receipts separate from personal ones. Use digital tools or physical folders to organize them

7. Track Shared Expenses: If you occasionally use personal items for business purposes (e.g., your phone), document these transactions

8. Educate Others: Ensure employees and partners understand the importance of keeping business and personal finances separate