Why it matters
Mixed accounts make every transaction a question: business or personal? Mistakes cost you deductions or create audit risk. For an LLC or corporation, mixing funds can also be used against the separation between you and the company if the business is sued.
Open the right accounts
A business checking account in the company's name and a business credit card. Use them for every business expense and deposit. Pay yourself with owner draws or distributions or through payroll, depending on your entity.
If you already mixed them
Go back and mark each transaction as business or personal. Record personal spending paid from the business as owner draws, and business spending paid personally as owner contributions or reimbursements. Then stop doing it.
Handling the gray areas
Home office, vehicle use and phone bills have special rules. Keep records of business use and ask your tax preparer how to treat them.
Monthly habit
Review the business account each month for anything personal. Move it out and record it correctly.
Common questions
Can I pay business expenses personally and reimburse myself?
Yes, if you keep receipts and record the reimbursement. Paying from the business account directly is cleaner.
Does this apply to sole proprietors?
Legal protection is not an issue, but your books will be cleaner and your deductions better supported.
This guide is general information, not tax, legal or accounting advice. Rules, fees and due dates change; check with the IRS, the NJ Division of Taxation or a licensed professional for your situation.