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Take control of your self-employed finances

Key takeaways

  • If you're self-employed, keeping work and personal money separate can help simplify your finances so you can focus on your business.
  • A separate account for business helps you better track cash flow, pay yourself more easily, reduce mistakes on taxes, and make your business more attractive.
  • Account features to consider include interest rates, fees, debit card, cash management tools, and level of FDIC insurance.

Being self-employed comes with a range of financial responsibilities that may have little to do with your field of expertise. Managing both your business and personal finances means navigating irregular cash flow, tracking revenue and expenses, and dealing with increasingly complex taxes—all while continuing to save for your future. Your talents, your years of experience, the very reasons you decided to work for yourself, may not mesh with these new responsibilities.

So how do you keep your finances organized and under control, so you can focus on your actual business? One way that may help is to keep a separate account for all your work-related finances.

If you use your personal account to deposit checks and track expenses from your business, you’re not alone: Nearly 70% of self-employed workers do not have a separate business checking account, which is not legally required unless you’re incorporated.1 And 87% of self-employed workers are not incorporated, working as sole proprietors without a legal entity for their business.2

5 reasons to separate work and personal accounts

If it’s not legally required for you, why bother? A separate account for your business may feel unnecessary, but doing so may help simplify your finances and even protect you from potential tax liability. Here’s how it can make a difference.

1. Better track your cash flow and manage expenses

A separate account for business-related finances gives you a clearer picture of money coming into and going out of accounts, allowing you to better plan and save for the future. You can easily monitor (and deduct for taxes) things like postage, shipping, office supplies, or mileage for work-related travel. Keeping such expenses in one place makes it easier to know whether you're spending more than you're earning.

It can also help establish your income, particularly if you receive payments by check. Copies of deposit slips, cashed checks, and bank statements offer a paper trail showing how much you’ve made.3

2. Paying yourself is easier with separate accounts

As a self-employed business owner, you can pay yourself a set salary, which helps establish a clear line between business and personal profits, or you can pull money from your business profits as needed for personal use, which may offer more income flexibility. Either way, with 2 separate accounts, tracking money you move between accounts is a lot easier.

Note that how you pay yourself may have different tax implications. Be sure to consult a tax attorney to understand the right approach for you. If your business is incorporated, you may be required to formally pay yourself a salary, depending on how your business is structured.

3. Save time and reduce potential mistakes on taxes

The IRS recommends keeping a separate checking account to simplify tax filings and avoid potential penalties for mistakes. Not mixing business and personal finances lets you more easily tell what items are taxable as income or deductible as a business expense.3 Anyone who’s sorted through piles of paperwork or old emails during tax time knows how much time and stress this can save.

Consider setting aside 30% of your net income to help make sure you have enough to pay taxes. offers additional resources on taxes for the self-employed, including its Tax Withholding Estimator to help you figure out how much to withhold.

4. Be better prepared for a potential audit

The odds of being audited by the IRS are generally low, with less than 4 audits out of every 1,000 tax returns filed in 2022; however, for taxpayers that used a Schedule C to report income (as most self-employed individuals do) those odds increase to between 8 and 16 audits per 1,000.4 Should you find yourself the subject of an audit, a separate account for your business lets you show clear evidence of income and expenses.

The IRS suggests reconciling your checking account regularly to make sure your recordkeeping matches statements from your banks or financial institution. This is a lot easier to do without having to sort through personal expenses, while reducing potential errors.

5. Make your business more attractive and professional

When your finances are organized, it can be a sign your work is too, giving those you do business with peace of mind. A separate account for your business helps you look more professional and shows that you take your work finances seriously. Some potential customers or investors also may not feel comfortable writing checks or making payments to a personal account.

What to look for in a separate account for your business

When shopping for a separate account, features can vary, so be sure to find the best terms that fit your business’s needs. If you’re not incorporated, you may not necessarily need a formal account in your business’s name; a separate personal account should do. Features to consider include:

  • Introductory offers
  • Interest rates for savings, checking, and lines of credit
  • Fees for transactions, early termination, or minimum account balances
  • Debit card, transfers, and checkwriting for business payments
  • Direct deposit options from various businesses
  • Online tools to help organize your money

FDIC insurance and cash management considerations

Another key feature to consider is FDIC deposit insurance, which protects your money in a bank failure. Deposits at each FDIC-insured bank are automatically insured to at least $250,000; however, FDIC insurance may also be available at levels higher than offered through traditional bank accounts.

A cash management account at a firm like Fidelity, for example, offers FDIC insurance for cash balances that are swept into deposit accounts with banks Fidelity works with. Once you reach the maximum deposit limit at one bank, other banks can hold additional money, providing potentially higher levels of FDIC insurance than possible at one bank.5 Learn more about how Fidelity safeguards your accounts.

A Fidelity® Cash Management Account also offers traditional bank features like checkwriting, debit cards, online bill pay, mobile check deposit, and wire transfers. Generally, cash management accounts pay a higher yield than a bank checking account, while Fidelity charges no maintenance fees and requires no minimum balances to open an account.

Note: If you’re incorporated, such as an LLC or S-Corp, and required to open a business account, you may want to consider Fidelity’s versatile brokerage account for businesses.

Ready to get started?

Whatever type of account you choose, when you’re self-employed, keeping your business and personal finances separate may be a difference-maker to help you get organized and take control of your finances.

Looking to simplify your cash flow?

Take control of your work-related expenses with a Fidelity® Cash Management Account.

More to explore

1. Fidelity Independent Worker–Savings Benchmarker Survey, Strategic Research Team, September 2023 2. US Small Business Administration, Office of Advocacy, Frequently Asked Questions, March 2023, 3. New York State Department of Taxation and Finance, "Using separate accounts," March 7, 2022, 4. Transactional Records Access Clearinghouse (TRAC), Syracuse University, "IRS Audits Few Millionaires But Targeted Many Low-Income Families in FY 2022," January 4, 2023, [need to write out full source info]


The Fidelity Cash Management account is a brokerage account designed for investing, spending and cash management. Investing excludes options and margin trading. For a more traditional brokerage account, consider the Fidelity Account.

​The Cash Balance in the Fidelity Cash Management Account is swept into an FDIC-Insured interest-bearing account at one or more program banks and, under certain circumstances, a Money Market mutual fund (the "Money Market Overflow"). The deposits swept into the program bank(s) are eligible for FDIC Insurance, subject to FDIC insurance coverage limits. Balances that are swept to the Money Market Overflow are not eligible for FDIC insurance but are eligible for SIPC coverage under SIPC rules. At a minimum, there are 20 banks available to accept these deposits, providing for up to $5,000,000.00 of FDIC insurance. If the number of available banks changes, or you elect not to use, and/or have existing assets at, one or more of the available banks, the actual amount could be higher or lower. All assets of the account holder at the depository institution will generally be counted toward the aggregate limit. For more information on FDIC insurance coverage, please visit Customers are responsible for monitoring their total assets at each of the Program Banks to determine the extent of available FDIC insurance coverage in accordance with FDIC rules. The deposits at Program Banks are not covered by SIPC. For additional information please see the Fidelity Cash Management Account FDIC Disclosure Document (PDF).

Your Fidelity Cash Management account will automatically be reimbursed for all ATM fees charged by other institutions while using the Fidelity® Debit Card at any ATM displaying the Visa®, Plus®, or Star® logos. The reimbursement will be credited to the account the same day the ATM fee is debited. Please note, for foreign transactions, there may be a 1% fee included in the amount charged to your account.

Some banks may charge a fee for receiving the transfer.

This information is general in nature and provided for educational purposes only.

Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.

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