It's Fine To Mix Personal And Business Bank Accounts

If you are a sole proprietorship

Mixing personal and business transactions isn’t a problem with the IRS. If you’re a sole proprietor juggling appointments, client deposits, and expenses through your personal bank account or Venmo, do not worry that you’re not keep your business and personal transactions separate. The risk you should always worry about is your business, not your accounting.

Why have you been told not to mix personal and business?

Because that is a best practice for more complex businesses than yours, and its essentially a requirement for some types of business structures to maximize the benefits of those structures. But the maximum benefits of YOUR business structure — the radically unstructured Sole Proprietor — is total freedom around which accounts you use for your business. You are 100% fine using personal and business accounts for your small sole proprietorship.

Note: there are lots of accountants making money off trying to convince you to run a more complex accounting system than you actually need. They are like a doctor who only makes money when they prescribe something, trying to prescribe something for you because it’s the only thing they know.

How do I manage mixing personal and business accounts?

You simply need to categorize all your personal transactions as personal, and all your business transactions and business. There is nothing wrong with doing this.

An accountant will tell you that it seems like more work to them. Accountants are the kind of people who have far more organized lives than yours. They cannot imagine how disorganized your life is. They might even tell you that you should just not be running a business at all.

I strongly disagree with this. You just need better tools to separate your personal and business. Try Nobooks — we handle this for you automatically; you’ll never have to think about which debit card to use again.