Can I Use my Personal Bank Account for Business?

Being business owners or entrepreneurs, we’ve all been there. We have a great idea for a business, and we just want to get it started as soon as possible. This sometimes means considering the use of a personal account for business reasons as a way to save time.

But using a personal bank account for business is never a good idea and can lead to many problems that can easily be avoided by simply opening a separate business account.

This is especially true when people are just starting a new business. They often think since the business is new, they can use a personal account until they grow larger then switch to a business account.

The problem with this line of thinking is that it disregards how important it is to start a business correctly and get it off on the right foot. This means obtaining all the proper paperwork such as an EIN or LLC documentation but also proper bookkeeping and banking.

Mixing personal and business finances can lead to tax issues, accounting issues and even legal liability in some cases that could put you at risk.

If you’re starting a new business and plan on putting your heart and soul into it, there’s no reason to sabotage your efforts by trying to use a personal bank account when obtaining a business account from the start can be so easy.

Understanding the Difference Between a Personal Bank Account and a Business Bank Account

Business and personal bank accounts may seem very similar other than the name on the account. But they have critical legal and accounting differences that both protect the business and can help it succeed.

Personal Bank Account

A personal bank account is probably the type of account you’re most familiar with. These accounts are meant for personal finances, which include your salary or income.

They are then used to cover your daily expenses, like paying for rent or a mortgage. There may also be debit or credit cards linked to those personal accounts that are also used for day-to-day spending.

Business Bank Account

A business bank account is similar, but it is used to store money and handle the day-to-day finances of a business entity instead of an individual.

This means it is used to pay for business expenses, such as rent on a storefront, or to pay for business-related goods, like shipping materials.

A business account also allows for checks to be written with the business name on them. Also, different individuals can be added to be signatories on the account if needed.

Risks of Using a Personal Bank Account for Business

It can be very tempting to use your personal account when starting a business. Most people already have a personal account, so it seems like a faster way to get your business started and off the ground.

However, there are a lot of serious risks that come along with that strategy, and this can put both your business and personal finances in danger.

Tax Consequences

Taxes are one of the main concerns for businesses as making errors in this area can lead to large fines and even criminal charges in some cases.

With a personal bank account that is used for business, all money going into the account is seen as personal income. But when filing taxes, you will likely not want to file all business-related money coming in as income. This situation sets up a problem where you may file your taxes incorrectly or even trigger an audit.

If there is any type of audit, separating your personal and business income may be impossible if it all went to a personal account.

Legal Liability

One of the benefits of setting up your business correctly from the start is that it protects you from legal liability should a customer or other individual sue you.

Having a proper LLC or other business designation along with a business bank account means that even if your business is found to be at fault, your personal finances are outside the reach of most judgments and settlements.

But if you mix your business and personal accounts, this may open you up to personal liability should you be sued. In this case, your personal bank accounts may be considered part of the business and therefore can be used to satisfy any judgments against you.

Difficulty Managing Your Finances

Besides the more serious problems with taxes and liability, mixing your personal and business finances also makes your job of running the business much harder and can increase the chances of the business failing.

When finances are mixed, it becomes very difficult for the business owner to track expenses and profits. You may have no idea how much profit you are actually making or how much money you are losing.

It would be unfortunate if you had a great business idea with enormous potential but it failed due to poor bookkeeping. This sort of situation happens every day, and it can be easily avoided by separating personal and business finances.

Greater Potential for Fraud

By having all your finances in one account, you can be at greater risk if someone gains unauthorized access. In a case like this, unauthorized access could drain both your personal and business income if they were in the same account.

Why You Should Set Up a Business Bank Account

Setting up a business bank account helps get your business off on the right foot and can drastically increase the odds of success. Starting a business can be hard enough with the many challenges you will face. A business banking account helps you avoid many of those challenges and pitfalls altogether.

Financial Security

By properly using a business bank account instead of your personal account, you ensure your own financial security. There is less chance that you will encounter any financial issues with back taxes or faulty bookkeeping that could threaten your financial security.


A business bank account lets customers and vendors know you are a legitimate business. Checks and credit cards can have the name of the business, which helps communicate that you’re a serious business owner and that people can trust doing business with you.

A business that hasn’t taken the time to set up a business account communicates to others that it may not take its responsibilities seriously.

Ease of Access

Keeping separate bank accounts makes accessing the money you need for either personal or business reasons easier to access. Business funds are readily available, and your personal account can be reserved for personal income needed to pay day-to-day expenses.

How to Open a Separate Business Bank Account

Now that we know all the benefits of using a separate business bank account, we’ll look into how to set one up so you can enjoy the financial security and peace of mind it can bring.

Decide the Type of Business Bank Account You Want to Open

There are several types of business accounts, including checking or savings accounts. Some businesses also choose to open a separate account just for payroll if they happen to have employees.

There are also merchant accounts for business, but these are for processing credit cards, and the money is then deposited into your business account. Many of these merchant accounts that allow you to process credit cards will require a business bank account.

Many people ask, do I need a business bank account for a limited liability company (LLC)? The truth is, the type of business doesn’t matter, and all business structures will need a business bank account.

Collect Your Business Documents

When you register your business, you should receive certain documentation. This can be business licenses or articles of incorporation for an LLC. You will want to have a separate bank account for an LLC. This includes a single-member LLC bank account.

You may also have received an EIN number or employer identification number. This number acts similar to a Social Security number, but it’s for your business.

Make sure to gather up all of these documents when you’re ready to open your account.

Set Up Your Business Bank Account

When you have all your documents together and have chosen the type of bank account you need, you can follow the steps indicated by the bank you have chosen.

If you need help with this process or are unsure where to start, this is where doola can help you get your idea off the ground. Our business startup packages include everything you need to not only register your business but get your bank accounts ready as well.

Start Your Business Right With doola and a Business Bank Account

If you’re just starting out, a lot of this information may seem overwhelming. You already have a great business idea, and you just want to get started without a lot of hassle or red tape.

You’ll find that doola has helped thousands of business owners just like you focus on their business instead of the annoying paperwork required to get started.

Our services help you obtain all the legal documents needed to start your business the right way. The best part is, you can do it all easily rfrom your computer or phone.

Just enter some basic information, and we handle the rest. All your legal documents and business registration are handled for you. We also have services to help you get your business bank account started as well.

So if you’re ready to get that business idea off the ground, let doola handle your registration and other services so you can focus on what you do best.


Is it okay to use a personal bank account for business?

No, this is almost always a bad idea and can lead to serious tax and liability issues. Using a personal bank account for business can also increase the chances of the business failing due to poor bookkeeping.

Can I pay business expenses from my personal account?

You shouldn’t pay business expenses from a personal account. This makes bookkeeping extremely difficult and can also increase your liability if someone were to sue the business.

Does LLC need its own bank account?

Yes. An LLC also protects you from liability. Services like doola allow you to set up your LLC in just minutes. We can even help with setting up your business bank account for an LLC.

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