Keep It Simple: Separate Personal and Business Finances

Published 05/21/2019

By Vince Nardi

As a financial advisor, I have the chance to talk with many small business owners about the joys and challenges of running their business. Although their stories vary widely from industry to industry, I have noticed a common, underlying theme. The stories usually reveal the business owner's drive, creativity and desire to succeed. When just starting out, business owners will do themselves a great service by separating their business and personal finances.

It may be intuitive to separate business and personal finances, however, the Clutch 2018 Small Business Accounting Survey found that untangling the two was challenging.1 Startups and new businesses were especially prone to not separating their bank accounts. Even though startups may not see the need at the beginning, they are more likely to face greater recordkeeping challenges as their business grows. 

Of the many good reasons to obtain a checking account and credit cards solely for business use, there are three vital benefits worth the investment of time and effort. First, doing so can help identify areas where costs are prohibiting growth to help a small business now and in the future. Second, it is possible to discover hidden expenses in blended finances that might be revealed only after finances are separated. Third, anyone interested in reviewing the small business financials (these parties could be a business partner or a potential buyer) will find separate business accounts easier to navigate and understand.

Business owners who have their finances separate are one step ahead of the game. One thing is certain when considering the results of the Clutch survey: "Properly managing money is central to the success of a small business."2

1 Riley Panko, “Small Business Accounting in 2018: 4 Tips to Manage Small Business Finances.”, August 28, 2018.

2 Ibid.