15760 Ventura Blvd, Suite 610 Encino, CA 91436
15760 Ventura Blvd, Suite 610 Encino, CA 91436
Personal, Affordable Payroll Services, Bookkeeping, and Tax Processing for Small Business throughout Los Angeles County.

Mixing Your Business and Personal Bank Accounts Is a Very Bad Idea

We are in the middle of an explosion of entrepreneurship in the USA. Millions of individuals have moved into the business world that never dreamed they would consider doing so. There are many reasons this is happening, but they include:

  1. The shared economy – People are renting a room in their home or even a mattress on the floor through AirBnB and other such services. Others are becoming Uber or Lyft Drivers. Still others are doing delivery services or odd jobs. Yet another opportunity is found in renting out personal cars through Turo.
  2. Amazon, Ebay, Shopify, and other online shopping systems have made it easy for folks to sell a few items without much risk or overhead. Millions have done so.
  3. Millions of individuals are now employed as 1099 contractors that might have been employees in the last century. Artists, web designers, customer service reps, and more are working in their pajamas from home for one or more companies on a job-by-job basis. Online services like O-Desk have made this option easier to access for both employers and workers.
  4. Multi-level companies have been around since Amway, but it seems like today there are more opportunities in these precincts than ever.


Many, maybe even most of such small businesses have no idea that they need to be “in the system.” In other words, they aren’t knowledgeable about things such as business licenses, incorporation, dba’s, bookkeeping, filing taxes, or keeping track of expenses. And commonly they are not even separating their financial information into separate checking accounts.

To make matters even more complicated, many such companies have multiple cash processing methods. In addition to cash, checking, and credit card account transactions, they might also be using PayPal, WePay or similar systems for both business and personal use.

Why is it important to separate these transactions by opening accounts for each company, and one for personal? Reasons include:

  • Audits by the IRS, SSA, or other federal, state, or local governments become almost impossible to resolve. These agencies will assume you are hiding income and expensing personal items. It will be up to you to prove them wrong.
  • Your memory fails you. Even when you are trying to do your year-end taxes, many transactions will have lost all meaning. What was that check for $150? Why did I take out $300 in cash?
  • You don’t know if you are making money. Say you are an Uber driver, and you gross $50,000. Seems like a good deal. But you have not kept track of auto expenses related to the use of the car for personal trips and those for business trips. Or you have mixed up income from Uber with income from other activities such as handyman work or deliveries. Maybe you are actually only making $10 an hour when doing Uber and $50 an hour when doing deliveries. Having separate books will give you direction on better ways to allocate your time and effort.


This list could go on and on, but just these three should be enough to show that mixing up your business and personal financial processing systems is not wise.

If you are in business for yourself, and you have started to grow to the point where you are hiring others, you may want to consider using an outside payroll service. You might also prefer to use an independent bookkeeping company to manage your books and prepare profit and loss statements. When you reach that point, call ATPP and discuss their very affordable options.   818-436-2775