How to Stop Commingling Business and Personal Funds Now!

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When I first started my blog, I had no idea if I was going to make it into an actual business. Wasn’t sure if this was going to be something lucrative (Still not 100%.). And damn sure didn’t know that I will begin my entrepreneurial journey in a service-based business. I knew that once I started, it was important to keep the finances separate, but I wasn’t exactly sure how when I was not yet making money.


A post that has been and continues to be a hit on my personal blog was my 50/20/30 budgeting system post. This system allowed you to allot money for different aspects of your life 50% fixed expenses. 20% was saving and financial obligations. 30% flexible spending which included personal allowance. When I started blogging, I would use my money to go towards my business. I bought my camera, domain name, and hosting services and was ready to go. A couple of months into blogging, I began to get interested in design and wanted to try everything on my own, so I got a subscription with Adobe Creative Cloud.


Next thing you know I was making all sorts of small investments here and there for my blog that I started to treat like a business. I forgot the simple accounting principles of keeping everything separate. I then opened another personal checking account to drop my coins (literally since I didn’t receive much) from my Amazon Affiliate and a business PayPal account for my earnings from anything else that I did.

At the end of last year, I started to look back on the things that I felt like gave me purpose in serving an audience just like me, female entrepreneurs. I wanted to serve those in their businesses to avoid common mistakes that cause their business to implode. Not keeping personal and business finances are one of them for sure!


Most of us start on as a sole proprietor (by default) because we believe that it is the easiest come tax time and time in general. Also, because we don't realize that we're getting paid for doing something that we love.

So many creative entrepreneurs and bloggers believe that being an LLC may be unattainable from where they’re at right now and for sure haven’t a clue what an S-corporation is.

I knew that I wanted to be an LLC once I knew what I drove me to follow my passion. Being an LLC would protect me from an array of liabilities as long as I followed the single-member LLC responsibilities.

Don’t know the responsibilities of a single-member LLC?! Look at this great video that beautifully describes how to cover your butt!

You also have a choice in registering a DBA in your state as a sole proprietor. A DBA stands for “doing business as”. Great for someone who does multiple endeavors and multiple streams of income.

After you figure out the logistics with your attorney and accountant, you will then be able to register for your own EIN number. Bet you didn’t know you can do this as a sole proprietor!

Having a separate Tax ID (Or TIN!) helps with avoiding giving everyone your social security number for sponsored posts in your blogging network program.


Any way, you turn it, you will need to open separate accounts for your business. You can choose to have it in your name (like I did in the very beginning) or use your business name once you acquire an EIN. To open it with your business name, you would need to be able to provide the proper articles from the state to your local bank.

I chose to open my business bank account with my credit union. I was able to open my checking account for free and my savings account for $5. Here is a list of free business bank accounts!



For my business, I use Xero cloud accounting. It has a functional interface that is easy to use. I service all of my clients on this accounting software. Everything is stored in the cloud, which means that I can do my accounting anywhere (even from my phone) and know exactly how my business is doing at any given time.

They have different levels of subscriptions that you can use with Xero. You can send out invoices, track your expenses, reconcile your bank transactions, and plan out your recurring bills for the entire year.

Xero also allows you to create a budget for the whole year. I do this for my bookkeeping clients as part of my onboarding tasks. The written budget allows us to start out bookkeeping journey with a clear space on your profit goals for the year. You can see numbers on how your revenue compared to your budget and now how to move forward the following months.

With an accounting system Like Xero or Freshbooks (as another example), you’ll be able to track your startup costs. You can make an expense report for all of the money used in your personal spending, input it into your accounting system, and pay yourself back accordingly. This reimbursement that you give yourself is tax-free, so you have to ensure that you are documenting everything correctly.


As stated before, when you start a business, you will put your personal funds into it. This means that your will be putting capital into your business (aka equity). You will want to research your industry. What are people spending? What can you invest in yourself to ensure that you will be able to stand out and be more confident in the work that you do?

When you give your business equity, depending on your business entity, this is considered owner’s contribution. You can continue to contribute to your business to ensure that you will be able to make the investments you deem necessary for growth in your business. This makes it easier to know that your business is still lucrative after making our investments. Remember, these investments are tax-deductible and are loans that your will later pay back to yourself!


Estimate the monthly stuff (Fixed Expenses)

Calculate the percentage of your phone bill that you use strictly for your business. Is it 30%, 50%, or 75%. Once you get the approximate number, you can make your life exponentially easier during tax time. If your phone is used for your business 40% of the time and your bill is about $120; you can pay $48 straight from your business account. For me, I would like to make my phone a wifi hotspot so that when I do client work on the go, I do not have to use public wifi. Instead, my personal hotspot (along with protection software on my computer), will allow me to run my business remotely on a private network. This is a direct cost to my business because there was no other time where I needed my phone to be a personal hotspot before starting my business. So let’s say that the hotspot cost an additional 19.99 to your phone bill. The $48 (40%) of your bill plus the additional cost of the hotspot, will be straight from your business account.

We only have the internet, in our home for the time being. No cable. This makes it easier to know how much is being used for my business. For me, I use the internet about 70% of the time when I am at home. I do not wish to stream on Netflix all day and chill since I am in the beginning steps of my business. I am one-third of my household, but I am home during the week to work from home. When I calculate the amount that I am using for the internet again, I can put this on the business account’s tab, and it will be deductible at the end of the year.

Non-Fixed (Variable) Expenses

Variable expenses are those that do not have a consistent price every month. These include meals/entertainment (for wooing a new client or network event), mileage (for getting to meetings with said client), office expenses, material (items needed to craft your finished product), and travel (conferences). 

Office expenses

Whenever you are out, and you see something that is both lovely and functional for your business, you can use this as an office expense. Don’t try to buy it with your personal expense then go and try to put it in as a reimbursement


Traveling for business is beautiful, but did you know that it is tax deductible. If you ensure proof that you are going to travel for business as the main priority, you can have this be tax deductible. You can document all of your airline, hotel, and car rental fees for your trip. But you should also know that meals and entertainment can only be deducted at 50%

Meals and entertainment

Tracking meals and entertainment can be tricky. 

Here's how to break it down to know when to pull out your biz card:

  1. When you are deep into work with your staff and instead of everyone taking a long break, you order pizza for your team (100%)
  2. If you are meeting up with a potential client - yes (50%)


A Beautiful Picture to Tie All Together!

Stop Commingling Personal and Business Finances!

I hope that this has been helpful for you to cease the biggest mistake in business, mixing together your funds! As a small business owner, it is best practice to consistently use a good accounting system and ensure that you’re not spending too much in your business. Also, a great way to make sure that you are tracking the amount that you pay yourself back in the personal contributions you made.

If you are a business owner overwhelmed with the finances in your business, feel free to visit my virtual bookkeeping service page, fill out the questionnaire, and schedule a free appointment.

Don’t have many monthly transactions and still stuck on the bookkeeping in your business? Schedule a discovery call with my to see how I can help train you to be a little more savvy in keeping your books in order!