One book, or two?
A plain guide to the difference between running a business through a personal account and opening a separate business one — written for people who have not split the two yet.
The site is new and nothing is published on it yet. What follows is the ground it is being built to cover, so you can tell whether it is worth coming back to.
- Book
- Business Banking Basics
- Subject
- Business accounts, personal accounts
- Written for
- Owners who have not separated yet
- Entries to date
- None — the book is still empty
| Date | Particulars | Withdrawn | Paid in | Balance |
|---|---|---|---|---|
| 04 Jan | Invoice 0118, settled | — | 1,240.00 | 1,240.00 |
| 06 Jan | Grocery shop | 82.15 | — | 1,157.85 |
| 11 Jan | Card reader, monthly | 29.00 | — | 1,128.85 |
| 14 Jan | Rent, flat | 950.00 | — | 178.85 |
| 19 Jan | Invoice 0119, settled | — | 640.00 | 818.85 |
| 22 Jan | Supplier, packaging | 116.40 | — | 702.45 |
Illustrative copy, set to show what a passbook page looks like when one account carries the shopping and the invoices together. The entries and balances are invented for that purpose; they are not data and not a record of any account.
What a second book changes
Separating the accounts does not make the business earn more. What it changes is how much work sits between the year you had and the year you can file, and how clearly the business reads as something distinct from you.
On the facing page, the same month is kept in a book of its own. The household lines are gone and the owner takes a draw instead, so the balance at the foot of the page is the business’s balance rather than a figure that means nothing to either side.
It costs something too. A business account has to be applied for, usually carries charges a personal account does not, and adds a transfer every time money moves between the two. Those trade-offs get their own write-ups.
Spread II — the second book| Date | Particulars | Withdrawn | Paid in | Balance |
|---|---|---|---|---|
| 04 Jan | Invoice 0118, settled | — | 1,240.00 | 1,240.00 |
| 11 Jan | Card reader, monthly | 29.00 | — | 1,211.00 |
| 19 Jan | Invoice 0119, settled | — | 640.00 | 1,851.00 |
| 22 Jan | Supplier, packaging | 116.40 | — | 1,734.60 |
| 28 Jan | Owner draw, to personal | 900.00 | — | 834.60 |
The same invented month, kept apart. As above, the entries and balances are illustrative copy and not a record of any account.
The entries this book will carry
None of these exist yet. They are listed as ruled entries rather than links because there is nothing behind them to open — this is the shape of the book, not an index of finished pages.
When a write-up goes up, its line here becomes a link and the date column fills in. Until then the column stays blank, which is the honest state of it.
Spread III — contents, unwrittenA business account beside a personal one
What each kind of account is built for, and what actually changes when the money moves.
What a bank asks for at the counter
Registration paperwork, a tax ID, ownership details, and who has to be there to sign.
Running both through one account
Where mixed entries cost an evening at the books, and where they cost rather more than that.
Sole proprietor, LLC, and which account follows which
How a business is registered decides which accounts are open to it in the first place.
Fees, minimums and transaction limits
What business accounts tend to charge for, set beside what personal accounts tend to charge for.
Going from one book to two
Standing payments, cards on file and the order to change them in so nothing bounces.
Neither column is the recommendation
The table on the facing page gives the two kinds of account the same width, the same weight of type and the same amount of room, because for a good many businesses the answer genuinely is “not yet” and for a good many others it is “months ago”.
What decides it is how the business is registered, how much it actually transacts, and how much of the year you are prepared to untangle afterwards. Those are the things the write-ups will work through, one at a time.
You will not find a winner declared at the top of a page here, or a number attached to either column.
Spread IV — held even| Business account | Personal account | |
|---|---|---|
| Held for | Money the business takes in and pays out, kept apart from the owner’s own. | Wages, household spending and savings that belong to the person, not the business. |
| Opened in the name of | The registered business, which means the registration has to exist first. | The individual, who can open one without registering anything. |
| What the bank asks for | Formation documents, a tax ID and details of who owns and controls the business. | Identification and an address, in most cases. |
| Where the charges sit | Worth checking monthly maintenance, cash deposits and transaction volume. | Worth checking overdraft terms, transfers and use outside the country. |
| At tax time | One statement that already reads as the business’s year. | A year that has to be separated line by line before it can be filed. |
| Where it gets awkward | Paying for something personal from it, which undoes the separation you opened it for. | Taking business payments into it, which is the same problem from the other side. |
The small print, first
Worth setting down before there is anything to read, because it is what the writing will be held to once there is.
None of it is a claim about work already done. Nothing on this site has been tested, surveyed or scored, and these notes exist so that stays true when the pages arrive.
Nothing is scored
Where one option suits a situation better, the page says so in words and shows the reasoning. No ratings, no stars, no tier boards, no percentages.
Figures come from the source, or not at all
Fees and requirements differ by bank and by state and change without notice. Where a number matters, the page points at where to read it rather than quoting one that has gone stale.
This is explanation, not advice
General writing about how two kinds of account differ. It is not financial, tax or legal advice, and it does not know your circumstances.
Affiliate links are disclosed
Some links may earn a commission. That does not decide what gets covered or the order it appears in, and it is stated on every page it applies to.
Before the first entry
The stamped sequence on the facing page is the order the decision tends to come apart in, and it is the order the write-ups will be published in as they are finished.
The numbers are positions in that sequence. They are not stages of difficulty and not a score of any kind — step four is simply the one that comes last.
Until the first page is posted, the sequence is the whole of what this site has to offer, which is why it is stated plainly rather than dressed up.
Spread VI — the order of itDecide which book the money belongs in
Most of the question is not which bank. It is which transactions are the business’s and which are yours.
Check what your registration allows
A sole proprietorship and a registered LLC are not offered the same accounts, and the paperwork differs with them.
Compare on the charges you will actually trigger
Cash deposits, transfer volume and card payments are where the two kinds of account come apart.
Move the standing payments last
Subscriptions, direct debits and cards on file are the part that quietly breaks in the changeover.