# How to separate personal and work expenses when you're freelance

> Without a split you don't know what you earn or spend, only what's left. How to divide them without incorporating, and what to do with the shared ones.

_Budgeting · Published 2026-09-02_

If you work for yourself and everything runs through one account, you have a
single number: how much money is left. That number doesn't tell you whether the
work pays, what you personally spend, or what you should charge. It's the average
of two different things.

Separating them doesn't require incorporating or signing up for anything. It
requires one decision and fifteen minutes.

## Why it matters, beyond your accountant

**To know whether the work pays.** If you invoiced 100 and spent 30 on work
things, you earned 70 — not 100. Without the split, those 30 blend into your life
and the profitability of your work becomes a hunch.

**To know what to charge.** A price is built on costs. If you don't know what it
costs you to work each month, your price comes from whatever the person next to
you charges.

**To avoid spending the tax money.** Tax money looks like your money while it's
sitting in your account, and that's the whole problem.

**For when deductions are due.** If a year later you have to reconstruct which
expense was work, you'll do it badly and lose deductions.

## The minimum that works: two accounts

You don't need five. Two:

**Inbound account.** Everything you're paid lands here. Work expenses come out of
it, the tax percentage gets set aside from it, and once a month you transfer
yourself a salary.

**Personal account.** Your salary lands here and your life comes out of it. Rent,
groceries, going out, all of it.

With just that, each account's balance means something. Without it, no balance
means anything. The monthly salary mechanics are covered in
[budgeting with irregular income](/en/blog/budgeting-with-irregular-income).

## How to classify each expense

There's one question: **would you still pay for it if you stopped doing this work
tomorrow?**

- No → it's work.
- Yes → it's yours.

Cases that sort themselves out with that question:

| Expense | Without this work, would you pay it? | Goes to |
|---|---|---|
| Hosting for a client's site | No | Work |
| A laptop you only use for work | No | Work |
| Coffee you drink at home | Yes | Personal |
| A design subscription you use for everything | Yes, but less | Mixed |
| Phone | Yes | Mixed |
| An industry course | No | Work |

## Mixed expenses: pick a percentage and leave it alone

The phone, internet, rent if you work from home, the car. The temptation is to
calculate it precisely every month; the result is that you stop calculating after
two.

What works: **set a percentage once, write it down, and always apply the same
one.** 50% of the phone, 30% of internet, whatever is reasonable in your case. A
fixed, defensible percentage beats an exact calculation that lasts a quarter.
Revisit it once a year, when something actually changes.

## If you don't want two accounts: tags

Opening a second account isn't always possible or convenient. The alternative
that works is marking each expense as you log it: a "work" tag and that's it.

It's messier than two accounts — the money stays mixed, and that's where the risk
of spending the tax sits — but it solves the information problem: you can see the
whole month, the personal month and the work month separately, without one view
breaking the other. Categories keep describing WHAT you bought and the tag says
WHAT FOR, which is the distinction explained in
[how many categories you need](/en/blog/how-many-expense-categories).

## Expensive, common mistakes

**Paying for work things on your personal card "just this once".** It's never
once, and at deduction time those expenses don't exist.

**Not logging small work expenses.** The cab to the meeting, the $12 domain, the
printing. Added up they're a month of invoicing a year.

**Treating gross income as yours.** What you invoice isn't what you earn. Between
the two sit taxes, costs and, if you work by project, unbilled time.

## In one line

Two accounts and one question: would you pay for it if you left this work
tomorrow? Mixed expenses go in at a fixed percentage reviewed once a year, and tax
gets set aside on the day you're paid, not the day it's due.

## Download

- iPhone (App Store): https://apps.apple.com/app/id6758053806
- Android (Google Play): https://play.google.com/store/apps/details?id=com.kesef.app

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