Separate bank account for freelance work?

Hi all, I'm wondering whether I can/should ditch the separate checking account + credit card I have for my freelance work.

I'm a full-time salaried employee and do a minor amount of freelancing on the side - roughly $2,500 of freelance income a year and $400 of related expenses. Amounts to about 4% of my total annual income. I track the freelance expenses in their own master category in YNAB. I currently have a checking account and credit card which I use for anything freelance-related, so it's separated not just in the budget but also in our accounts.

How important is this separation since I'm tracking everything in YNAB? Any reason to hang onto the separate checking account and credit card, like for tax purposes, or risk mitigation so I'm not paying for business expenses out of our family's primary checking account and credit card? Would your recommendation change if I started doing a lot more freelancing or became a full-time freelancer? Thanks for any thoughts!

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  • Keep them separate.

    1. there is little chance of inadvertently paying for business items with personal funds.
    2. depending on how you receive the freelance income (I'm thinking specifically of PayPal here) you don't want to risk your primary bank account in case PayPal or whatever gets weird.

    We keep a separate business budget in YNAB, too. Much easier at tax-time and when you need to show business P&L if you try to get a loan or what-have-you

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    • Tomato Tamale Thanks for your input! I do like the feeling of having them separate, and agreed it's a lower security risk if I'm connecting other sites like PayPal to the account. We're switching financial institutions, and finding credit cards with better perks, so that's part of my motivation to consider consolidating because it would just be one less account and new credit card to set up. But you make good points for why to maintain separate business accounts.

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  • Silver Guitar I would recommend going with Tomato Tamale 's suggestion of maintaining a separate business budget as well as separate business accounts. If you have those business accounts in your personal budget, there's little advantage, because YNAB sees the money in both the business and personal accounts as part of the same pool of money, and it would be extremely easy to spent business money on personal categories or vice versa.

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