Business account fitness series: Tip #1 – Set clear boundaries for your business account usage

Let’s explore how setting clear boundaries for business account usage can help you avoid the risks of complicated bookkeeping while keeping your business finances streamlined and primed for growth.

Your business account is designed for business transactions only - purchasing inventory, paying suppliers, receiving client payments, and so on. Using this account for unrelated expenses, such as personal entertainment or household bills, muddies the difference between business and personal finances. This could potentially lead to transaction delays or even disruptions to your business account operations.

Scenario 1: The blurred line

Amy, a business director, uses her business account for personal entertainment and her son’s overseas tuition. While convenient, this practice blurs the line between her personal and business finances, complicating her company's bookkeeping and raising concerns about transparency. Tracking genuine business income and expenses becomes more complex, which can impact tax filings and financial reporting.

In summary: Keep your personal finances strictly separate from your business account. This habit safeguards your company’s financial health and keeps your financial records clear and well-organised.

Scenario 2: Frequent transfers between accounts

Alan, a business owner, regularly transfers money from his personal account to his business account, and often accepts cash deposits from various individuals. His bank flags these account activities as suspicious and investigates further.

In summary: Frequent transactions from personal accounts to business accounts as well as receiving large cash deposits from individuals raise concerns about money laundering or fraud. Banks closely monitor for unusual account activities and may request supporting documents such as invoices or contracts to verify the legitimacy of these transactions. Use your business account strictly for legitimate transactions that align with the business profile registered with your bank.

Why this matters

Mixing personal and business finances is a common practice among SMEs. We understand how easy it can be to do so, but we also know how risky – and avoidable – it is as well.

By setting clear boundaries from the start, you’re helping your business reduce the risk of financial mismanagement and create a transparent financial footprint that’s straightforward to track and audit.

Maintaining a healthy, well-functioning business account is a crucial step towards keeping your business fit overall.

Tip #1 account fitness checklist:

As your trusted banking partner, we’re here to support you as you begin your business fitness journey and work toward achieving your ambitions. To learn more about how to establish proper business account practices, visit https://www.business.hsbc.com.hk/en-gb/campaigns/account-fitness.

Download the complete “Business Account Fitness Guide” now for more real-world business scenarios to help you understand how to establish proper business account practices for smooth operations.