Never Mix Personal and Business Money

Mixing personal and business money isn’t just messy bookkeeping. It’s a threat to your profit, protection, and peace of mind. The impact shows up in ways most owners don’t expect:

• Higher accounting bills: When your bookkeeper has to play detective over your Amazon orders, guess who pays for the investigation? You.
• Lost deductions: If it looks even a little personal, it lands in the “no deduction” bucket. Say goodbye to easy write-offs.
• Surprise taxes: Those “just one time” personal charges can trigger unexpected payroll or capital gain taxes.
• Audit nightmares: If the IRS comes calling, “check my bank statements” won’t cut it. You’ll need real documentation — fast.
• Legal exposure: We’re not attorneys, but blurring personal and business funds can pierce your LLC’s protection, putting your personal assets on the line if something goes wrong.

At Red Bike Advisors, we’ve seen how this plays out. When new clients come to us with books requiring a significant cleanup due to mixed business and personal expenses, we immediately advise them to disconnect their personal accounts from business QuickBooks, stop mixing expenses going forward, and that it’s going to take a LOT of time and effort on our part and theirs to sort through the mess. If they don’t want to participate, unsubstantiated expenses end up in the personal category. Bye bye, deductions. 🙁

Your Breakaway plan:

• Keep personal expenses personal and out of the company QuickBooks
• Keep business expenses business and substantiate with receipts and documentation
• Use an accountable plan for shared-use costs like home office and cell phone

Bottom line: Save yourself time and money later by doing it right now. Your tax bill and your accountant will thank you. 😊