What Is the Difference Between a Business & a Personal Account?

What Is the Difference Between a Business & a Personal Account?
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When you own a business, you have bank accounts for your personal income and expenses; you also have bank accounts for your business income and expenses. Although it may be inconvenient to keep separate accounts, it is good business practice.


  • Personal bank accounts are generally used for personal use, while business bank accounts differ in terms and are solely used for transactions related to a business's revenue and expenses.

Account Types

You can set up checking, savings and money market accounts for your business, just as you might for your personal use. Just as with personal bank accounts, business bank accounts differ in their terms, including whether they pay interest and how much they pay, so it can be worth shopping around for a good deal for your business. If you're frequently depositing cash into your business account, it may also be worth considering which banks are handy and safe for you to visit with large sums of cash.

You can also open business credit card accounts with many banks and credit card companies and even issue business cards to your employees. This can be useful for making purchases for your business and more easily documenting where money was spent than if you paid with cash or even paper checks, which may not immediately be deposited by vendors.

Documentation to Open

To open a business bank account, you, as the business owner, often must provide a copy of the business' federal identification number, articles of incorporation, board meeting minutes and the signatures of two individuals for deposit and check writing privileges. In the case of a sole proprietorship, one individual is sufficient. Personal accounts can be opened by one person with a driver’s license with a current address and Social Security card.

Account Fees

If a bank advertises a personal bank account with no fees, the bank must uphold that. However, in the case of business accounts, banks are allowed to state the accounts have no fees and then provide a list of exceptions. The most common exceptions are fees for the number of checks paid each month and the amount of actual cash deposited, as opposed to checks deposited.

Avoiding Personal Liability

Setting up a corporation provides legal protection for the individuals running the corporation from corporate liabilities. If you keep your personal and business accounts together, you run the risk of being personally liable for corporate debts since it appears there is no boundary between you and the corporation.

Easily Doing Taxes

Maintaining separate business and personal bank accounts allows you to easily identify business expenses for tax preparation. In the event of an audit, it is also easier to substantiate business expenses if the expenses are all from business bank accounts.