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For small-business owners and entrepreneurs building from scratch, it may be common for personal finances to get tangled with business finances.

As you get your company up and running, you might be tempted to use your personal bank account to help fund your venture and cover early expenses. But combining personal and business finances long-term could lead to accounting complexities.

Here's a practical, actionable guide to separating business and personal finances to help improve record-keeping as you grow your company.

Why Separating Business and Personal Finances Matters

Mixing personal and business finances may seem like an easy option, especially if you're a solo entrepreneur. But it might lead to difficulties as you manage and grow your business.

Instead, separating business and personal finances may help:

• Simplify accounting: You can organize business receipts and expenses.
• Track financial performance: Separating finances could make it easier to access business banking records and credit card statements to track business revenue and spending. You may then use this information to help adjust your budget and better meet your business goals.
• Reduce financial risk: Separating finances may offer a way to help establish your business as a distinct entity and protect your personal assets, particularly if you set up your company as an LLC or corporation. Creating this distinction may help reduce personal liability if your company faces financial issues.
• Build business credit: You could use your distinct business banking account and credit card to help build business credit and help demonstrate your creditworthiness to future lenders and investors.
• Access business perks: Business banking and credit card accounts may offer special features and opportunities to earn rewards, such as discounts on certain purchases and integrations with accounting tools.

8 Practical Tips to Help Keep Finances Separate

Learn how to help separate business and personal expenses with these eight practical tips — from determining spending policies to tracking expenses and opening a business credit card.

1. Set Up Distinct Checking Accounts

Creating separate checking accounts may help prevent accidental mixing of personal and business funds. You might use your business account, for example, to cover business expenses, set up payroll for employees, and track revenue earned from sales. And you might use your personal account to pay for groceries for your family, home bills, and other day-to-day costs.  

Using separate accounts for personal and business purchases may also help simplify record-keeping, making it easier to track and manage company spending as you grow.

Business checking accounts may also come with different offerings than personal accounts, such as higher transaction limits, the ability to open multiple debit cards, and integrations with financial management tools.

2. Categorize Your Receipts

Consider organizing your physical and digital receipts into two categories: personal and business receipts. If you travel for business, for example, consider keeping track of receipts for plane tickets, lodging, meals, and transportation. Or if you set up a home office, store receipts for furniture and supplies.

You may upload receipts to an accounting software program for easier access and tracking, or save receipts in a desktop or email folder. You could then refer to these documents when it’s time to prepare expense reports.

3. Open a Business Credit Card

Even if you have a personal credit card, it might be helpful to open a separate credit card for business expenses. You could use this card to:

• Track expenses: As with a business checking account, you could use a dedicated credit card to help cover business costs, such as equipment purchases and travel expenses.
• Build credit history: Making on-time payments and spending responsibly could help develop business credit and qualify for future loans.
• Earn rewards: You may want to consider taking advantage of built-in benefits like opportunities to earn cash back and discounts on certain purchases.

4. Establish Clear Spending Policies

Whether you’re a solo entrepreneur or managing employees, consider setting clear spending policies to help manage expense management.

You may start by defining which purchases are considered business expenses. Common examples could include:

• Office equipment and technology
• Flights and hotels for business travel
• Professional training and certification programs
• Software subscriptions
• Marketing and advertising fees
• Client meals and entertainment

The tricky part is that some purchases could fall into both categories. For instance, you might use a laptop or vehicle for both personal and business use. 

5. Set a Budget for the Business

Building a business budget could help you control spending and plan for growth. Tracking your revenue and expenses over time — such as each month, quarter, or year — could help gauge your business’s financial standing and prepare your budget for future spending.

With a clear budget, you could determine how much cash you’ll need on-hand to cover upcoming expenses. You could then set aside funds accordingly or consider financing options. Taking these steps in advance might help you avoid dipping into personal accounts and keep your business finances separate.

6. Keep Family and Partners Informed

If you share finances with a partner or family member, try to communicate your business’s financial setup and spending guidelines to help align expectations and prevent misunderstandings.

Specifically, you might stipulate:

• Which accounts and credit cards are used for business vs. personal purchases
• How business income is saved, allocated for spending, and managed
• Which purchases are considered business expenses

You might also communicate how business revenue differs from personal income. For example, your business may earn a certain amount of money, but you might only transfer a portion to your personal account as your salary.

7. Draw Lines Between Your Home and Office

Establishing physical and mental boundaries between personal and business spaces could help prevent spending overlap. If you work from home, for example, consider defining a specific space as your home office — whether that’s a separate room, a corner of your kitchen, or a part of your basement. This way, you'll know that any purchases made for this space could be dedicated to running your business.

Creating this boundary doesn’t just help improve focus and work-life balance. It could help you determine which portion of your total home costs may be business-related. 

8. Talk to a Financial Professional

Learning how to avoid mixing business and personal expenses may be difficult, especially for new business owners and entrepreneurs. Consulting with an accountant or financial advisor could help you verify new spending processes and keep you on track towards your goals.


Especially if you have questions about choosing a business structure or hiring employees, working with a professional could help you prepare for long-term growth.

From Expense Management to Business Funding

Separating business and personal finances may require some planning, but it may help simplify accounting and potentially better inform financial decisions as you grow your company. You might open a dedicated business credit card, for example, to help track expenses and manage business costs. 

Exploring financing options to reach that next step? Consider comparing a business line of credit and a loan to help you find the right solution for your financial goals.

Consider American Express® Business Banking

American Express^® Business Banking is branchless so you can manage your account on your time — but if you need support, we're a call or click away 24/7. Business Banking also keeps everything connected—from account management to money movement — online and in the Amex^® App¹. Plus, enjoy no monthly fees, earn APY and Membership Rewards^® points, with 24/7 support from our specialists. Terms apply. Deposit Accounts offered by American Express National Bank. Member FDIC.

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