--- title: "Separate Personal & Business Money: How to Do It | MCC" description: "Why it matters, which accounts to open and how to fix mixed records. Worked example." url: "https://mcc-solutionsnj.com/bookkeeping/guides/separating-personal-and-business-finances" --- Bookkeeping guide · Updated October 7, 2026 # Separating personal and business money: why and how Using one account for everything is the habit that creates the most cleanup work, and it can weaken the legal protection of an LLC or corporation. By [Matthew Coleman](/about), MCC Solutions **Quick answer.** Mixing personal and business money makes every transaction a question, costs you deductions or creates audit risk, and for an LLC or corporation can be used against the separation between you and the company if the business is sued. Want this handled for you? Monthly bookkeeping, cleanup and year-end close for small businesses. Start with a free health check of your books. [Free health check](/bookkeeping/health-check)[Get a quote](/bookkeeping/#interest) **Related:** [Owner contribution or loan](/bookkeeping/guides/owner-equity-and-capital-contributions) · [Closing entries and retained earnings](/bookkeeping/guides/closing-entries-and-retained-earnings) · [Void vs delete a transaction](/bookkeeping/guides/voiding-vs-deleting-transactions) **Free tools:** [Free invoice template](/bookkeeping/free-invoice-generator) · [Mileage deduction calculator](/bookkeeping/mileage-deduction-calculator) [![Intuit ProAdvisor Gold tier badge](/img/credentials/intuit-proadvisor-gold.png)](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77)Gold tier in Intuit's ProAdvisor program. [See my Intuit listing](https://proadvisor.intuit.com/app/accountant/search?searchId=matthew-coleman77) Keeping your own books? Tallyfinch does invoices, bank import and reports on your computer. [See Tallyfinch](/bookkeeping/mcc-books-downloadable-bookkeeping-software) ## 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. ## Want us to handle it? We set up your books with you, or keep them for you every month, online for businesses in any state. **Price:** Free review of your books first, then a written quote before any work starts. [Get a free review and quote](/bookkeeping/#interest) [Done-with-you setup packages](/bookkeeping/done-with-you-bookkeeping-setup) ## 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. ## Worked example with numbers You paid a $240 business supply order from a personal card. Record the expense and credit owner contributions, or reimburse yourself from the business account with a documented transfer. If a business card paid a $90 personal dinner, record it as owner draw. Keep one rule: every personal cost on a business account gets tagged the same week. ## Mistakes that cost money Paying bills from whichever account is handy. No notes. Letting the business account pay personal subscriptions. ## Check your work Review the draw and contribution accounts monthly. ## 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. Let us handle it [### Monthly bookkeeping Categorizing, reconciling and monthly reports, with cleanup, payroll and NJ filings available. Bookkeeping →](/bookkeeping/) [### Wave Bookkeeping help for Wave users in New Jersey, and when it makes sense to outgrow Wave. Cleanup, reconciliation and moves to another platform. Wave →](/bookkeeping/software/wave)[### QuickBooks Online Monthly bookkeeping, cleanup and reconciliation in QuickBooks Online for New Jersey small businesses. Your account stays in your name. QuickBooks →](/bookkeeping/software/quickbooks-online) More guides - [What to send your bookkeeper each month: a checklist](/bookkeeping/guides/what-to-send-your-bookkeeper-each-month) - [A monthly bookkeeping close checklist for small businesses](/bookkeeping/guides/monthly-bookkeeping-close-checklist) - [Cash vs. accrual accounting: which fits your business?](/bookkeeping/guides/cash-vs-accrual-accounting) - [How to read a profit and loss statement](/bookkeeping/guides/how-to-read-a-profit-and-loss-statement) Free tool - [Bookkeeping health check](/bookkeeping/health-check) [All guides](/bookkeeping/guides) Reach small business owners, freelancers and bookkeepers who read this guide: [advertise here](/advertise#bookkeeping). Do it yourself ### Freelance / LLC Operations Hub (Notion-Ready Files) A connected set of databases and routines for running a solo business, ready to import and adjust, with a property guide that tells you each setting. [See what's inside ($39)](/toolkits/freelance-llc-operations-hub)14-day full refund ## Rather have us keep the books? Ask for a quote. [Get a Quote](/bookkeeping/#interest)[Call (908) 444-6373](tel:+19084446373)