How to separate personal and business expenses

Question

Hello I recently Quit my Job to Rehab properties Full time but always had One Personal checking account where all my rental income goes into about 6k a month i collect cash (easier for me and tenants) But how does one do this i had planned on opening a separate personal account only where i deposit Rental income into but if i do So How will i Pay for modern day living expenses food,bills,car insurance,phone, etc...If ALL my income is going into the business account? because i dont want to MIX the two for tax purposes and how do i know what is considered a BUISNESS expense related transaction when i charge my buisness account?

Seth McGathey · Answer

How is cash easier? Man, I can not imagine trying to collect cash. Having it auto deposited into my account is such a time saver.

But I absolutely suggest splitting it. Personally I have three credit cards. My personal one, my real estate one, and my real estate agent one. Anything I spend on those three cards is specifically designated for that area of my life. Then I have a Chase account which is where I manage those cards (all three are Chase cards) but I keep almost no money in that account. My money almost all gets deposited directly into my Capitol One 360 account. Which allows me to divide up my accounts into separate categories. I have a separate one for each property, so I can see what money I have for that specific property. I also have one for my Real Estate Agent income, and one for my W2 job. Everything stays separate unless I manually need to move something around. But that is rare and only for really good reasons.

Frankie Betancourt · Answer

Ok thanks that helped me understand now

Joe Villeneuve · Answer

Have separate bank accounts.

Nadeem Alamgir · Answer

No problem! @Frankie Betancourt

Nadeem Alamgir · Answer

You should generally set up a separate business account for your rental income and expenses. Then, like a paycheck, you should pay yourself a set amount from that account each month.

For business expenses, anything related to operating or maintaining the rental (repairs, materials, insurance, property taxes, PM fees, etc) can be paid from the business account. You should keep receipts and track everything. It'll make tax time much easier. Of course, it's always smart to check with a CPA to make sure your setup properly.

How to separate personal and business expenses

How to separate personal and business expenses

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