As a self-employed individual or business owner, you can write off expenses that you incurred to earn your business income. However, you cannot claim personal expenses as business expenses. To make filing your tax return easier, it is recommended to have separate bank accounts for your personal and business expenses.
By establishing a separate bank account for just business, you’ll be able to quickly compare your business’s bank statement to your receipts without confusion. Additionally, you don’t risk accidentally claiming a personal expense as a business expense.
Having separate credit cards for personal and business use is also beneficial, as it is easier to calculate and deduct interest on business expenses. Finally, having separate accounts and well-organized records can streamline the audit process.