Keeping business and personal finances separate is the No. 1 rule for new business owners — even for a freelancer launching a side gig as a sole proprietor. Before you invoice your first client for a product or service, you should set up a separate bank account under your business name — or under your personal name if you’re a sole proprietor. Use this account for any money coming into your business or funds you spend on business needs. If you want to use any of your business money for personal affairs, transfer it into a personal account.
Maintaining this separation is essential not only because it allows you to accurately track the finances of your business, it also eases your business tax payments, enables you to track business write-offs, facilitates any audits you might undergo and discourages you from spending money you need for your business on personal whims. If you are planning to use accounting software, chances are you can link it to your bank account — a function that benefits you only if the account is dedicated to your business.