Separate business and personal money: the one change that fixes most books

If business and personal money share an account, every month is a sorting job. Here is the fix and the handful of rules that go with it.

One account, one card

Open a business checking account and get one card on it. Every business purchase goes on that card; every customer payment goes into that account. That is the whole system.

Owner money

When you put personal money in, it is an owner contribution. When you take money out for yourself, it is an owner draw. Both are normal; they just need to be labeled, not called income or expense.

The mixed months you already have

Don't go back and split old statements line by line unless a preparer says you must. Start clean on the first of next month and let the bookkeeper handle the old mixed months as catch-up.

What this is not

How owner draws and contributions are treated on a return depends on how the business is set up. That part is for your tax preparer.