How do you ensure you don’t spend business money on personal things (and vice versa)?

Maintaining a strict separation between business and personal finances is a common best practice for small business owners. From a legal and accounting perspective, “commingling” funds can sometimes complicate a business’s legal protections (such as the “corporate veil”). Vendors typically find that using dedicated accounts simplifies bookkeeping and provides clearer financial records in the event of an audit.

Handle exceptions immediately

If you pay a business cost with personal funds, record it right away as a reimbursement or owner contribution. If business cash is used personally, log it as an owner draw. Don’t let these pile up.

Pay yourself on a schedule

Transfer a set amount from the business account to your personal account regularly instead of pulling random cash. This keeps personal spending out of the business ledger.

Track receipts and splits

Save and label receipts. For mixed expenses (like fuel or phone use), record only the business portion. Even a simple spreadsheet works if updated consistently.

Clear separation reduces stress, improves bookkeeping accuracy, and shows how the business is truly performing.