Why this matters
Commingling, mixing business and personal money, makes tax deductions hard to defend and is one of the factors courts weigh in deciding whether to "pierce the corporate veil" and reach your personal assets. The safest default is one consistent habit: route every business dollar through the business account, and document and reimburse unavoidable exceptions promptly.
What "done" looks like
- All revenue, processor payouts, invoices, cash, deposits into the business account
- All expenses are paid from the business account or business cards
- You pay yourself by transfer (owner's draw or salary), never by personal spending from the business account
- Any accidental crossover is documented and reimbursed promptly
How to do it
- Repoint every income source, processor payouts, invoicing tools, marketplace deposits, to the business account today.
- Move every business autopay off personal cards and onto business cards or ACH.
- Pay yourself deliberately: a periodic transfer recorded as an owner's draw (or payroll where required), then spend personally from personal accounts only.
- Fund the business formally when it needs cash: a documented owner contribution or loan, not bills covered from your personal card.
- Scan statements monthly for anything that doesn't belong, the alerts from the previous step make this quick; reimburse and note any slip-ups.
Common mistakes
- Using the business debit card for groceries "and sorting it out later"
- Depositing business checks into a personal account because it was closer
- Covering a business shortfall from personal funds with no documentation
Real-world examples
- US courts consistently cite commingled funds as a factor supporting piercing the corporate veil, exposing owners to personal liability.
- IRS recordkeeping rules require substantiating business expenses; separate accounts are the standard way to do it.
From a founder's point of view
Treat the business account as a country with a border: money can immigrate and emigrate, but only through customs. Every uncontrolled crossing weakens the protection you formed the company for.
Rule of thumb
A stranger reading your business bank statement should generally find no personal transactions, and your business transactions should appear in personal accounts only as documented exceptions.
