It happens more often than you’d think: entrepreneurs use personal credit cards for business expenses, comingle business and personal bank accounts, or blur the line between personal and business finances. It feels convenient in the moment. It’s financially catastrophic in the long run.

The Cost of Commingling

When you mix personal and business finances, you lose the ability to build separate business credit. Lenders can’t evaluate your company’s creditworthiness. You lose tax deductions and create audit complications. Worst of all, you personally guarantee every business debt—risking your personal assets if the business struggles.

The Legal & Financial Risks

• Personal Liability: Mixing funds can dissolve the liability protection your business structure provides
• Tax Complications: The IRS scrutinizes commingled accounts, potentially flagging them for audits
• Loan Rejection: Serious lenders won’t fund businesses that can’t demonstrate financial separation
• Credit Damage: Business struggles directly impact your personal credit, affecting personal loans and mortgages

The Three-Step Separation

Starting today, separate your finances completely:

• Open a dedicated business bank account in your company’s name
• Get a business credit card linked to your company’s EIN, not your personal SSN
• Never use personal accounts for business expenses; never use business accounts for personal expenses

The Compound Benefits

Clean financial separation isn’t just about risk mitigation—it’s about opportunity creation. When your business finances are clear and organized, you qualify for better rates, higher credit lines, and larger loans. You also make tax time easier and protect your personal wealth.

If you haven’t already, open a business bank account today. It’s the single most important step you can take to build real business credit.