Keeping separate accounts

Even if a business is small, separate accounts teach financial discipline,” says Certified Financial Planner Cathy Curtis.

Keeping separate accounts also has other benefits for freelancers and small business owners:

1. Organization. It makes it far easier to track expenses and payments for your business if they’re not intermingled with personal stuff like your credit card bills and that fro-yo you bought at lunch. As Lauren Lyons Cole, CFP says, "Separate business and personal bank accounts and credit cards simplify record keeping.”
   
2. Taxes. A lack of separation may cause more scrutiny with the IRS. In addition to the audit risk, there’s also the matter of delineating business expenses (and proving they really were for your business) if you want to claim them as deductions. “Keep them separate from the beginning—don't wait," says Cole.