You Suck at Money, So Never Mingle Business and Personal ExpensesIf you don't keep personal and business book accounts separate, neither will your creditors or the IRS if things go badly.

Let's keep this short and sweet. There are two reasons why you need to keep your business and personal expenses separate: taxes and personal liability. This isn't me giving you legal advice, but just letting you know some of the basics that have helped me avoid disaster in the past.

Unfortunately, plenty of freelancers, entrepreneurs and small business owners haven't gotten that notice and continue to mix their personal and business finances. It may not seem like a big deal but trust me -- it is for IRS when you file your taxes, or if you ever default on lines of credit, loans or leases. It once prevented me from purchasing a home.

Here are five tactics that you need to implement immediately.

1. Set up separate accounts and obtain a business credit card.

"One of the first things to do when you start a business is to open at least one business bank account,"suggestsMax Palmer. "Opening a bank account is fairly straightforward, as long as you have the documentation you need, which for a business account might include proof of your business from your state, and proof of an EIN from the IRS."

Besides a business checking account, you may want to also consider opening a business savings account and even separate retirement and benefits accounts.

"Once you have a bank account, use it to manage business transactions. Business income should be deposited in your business bank account," adds Palmer. "Likewise, expenditures for your business should come out of this account. Even if your money just passes through your business and almost all of it ends up in your personal checking account, you need to move your money through the business account."

This creates "an extra step to put the money into your business account first, and then move it from there to your personal account, but it's an important step that helps with record-keeping."

Along with opening-up separate checking accounts, Palmer also recommends that you obtain a business credit card for all business-related transactions.

"Even if your business credit isn't established enough to qualify you for a card, you should still find a way to separate those transactions," says Palmer. "Designate one of your cards for your business so that, at the very least, you are using a different card for business-related purchases."

Work onbuilding your business credit scoreso that you don't have to rely on your personal credit score for your business in the future.

Related:4 Steps to Establishing a Good Business Credit Score

2. Establish a legal entity.

"As a business owner, one of the best ways to protect your personal liability is to establish a separate legal entity for your organization," says April Macquire forQuickBooks.

“当决定最好的业务结构your needs, it's important to consider all relevant factors, such as number of employees you plan to hire, your business' financing goals and your business' long-term tax implications, just to name a few."

This creates a distinct legal entity for your business limit for your future tax burden, as well as protects you as an individual from and legal liability is your company is ever sued. "In this way, incorporating your business creates a veil that safeguards the company owner (and his or her loved ones) from the organization's debts and obligations," adds Acquire.

When creating a separate business entity you need to obtain an employer identification number (EIN), also known as taxpayer identification numbers. EINs allow the IRS to track your earnings in a way that's distinct from your personal finances.

3. Come up with a budget.

Even though you have separate bank account and credit cards, there may be times when you have to pump money from their personal accounts into the company's account. Sometimes this is unavoidable, like for seasonal business owners. If you have established aclear budgetthat is based on your business' current earnings you should be able to avoid this since it lets you forecast your future earnings and how much you need each month to pay your expenses.

With this knowledge, you are forewarned and you can plan accordingly so that you don't have to dip into your personal finances.

Related:8 Reasons Why You Don't Have Money

4. Keep separate shoe boxes for receipts.

OK, you're not keeping receipts in literal shoe boxes. After all, there are some great tools likeNeat,Expensify, andShoeboxedthat allow you to capture, organize, and manage your receipts electronically. The concept behind this is that you should have two separate locations for your business and personal receipts.

These separate accounts may seem like a time consuming activity, so if you're in a crunch, make sure that youprioritize your business expenses.

The truth is, if you're ever audited, the IRS is going to be more concerned with your business receipts than your personal receipts.

Related:How to Live Rent-Free While Building Your Business

5. Define gray areas.

There are plenty of gray areas when it comes to separating expenses anddeductions, such as travel, food and entertainment. For example, if you take your spouse out to lunch on a Tuesday and you spend most of your meal discussing a client, would you consider that a business or personal expense?

The same is true if you work from home. You have to split the bills because it's not right that your business is paying all of the utility bills. You're not working 24/7, are you? Okay, well you might be working 24/7, but you get the idea.

To understand what is considered a personal versus professional expense, visit the Internal Revenue Service and speak with a financial advisor or tax specialist.