There are many obstacles that new small business owners stumble over if they are not careful, but one of the most common is the division between personal finances and those belonging to the business. It’s especially easy to blur the lines in this regard if you are a sole proprietor because even the way the U.S. taxes profits from a single-owner small business can blur your sense of which is which.

It is important, though. Without keeping a firm separation between the two, it is hard to tell when your business is making you money and when you are propping it up with your cash. Similarly, it can be difficult to make a business work if it absorbs your bills as excess overhead. Here is how you avoid either one happening.

  1. Separate Bank Accounts and Debts

Your business needs to keep its money separate from your finances, and vice versa. That means you need a business checking account at a minimum. Many companies also set up a separate business credit line for cash flow management and sometimes even a savings account, to hold reserve capital. This allows you to track income and payouts specific to the business separately from the income you receive from a day job, investments, or other businesses you own.

  1. Consider Creating an LLC

To further separate the company from yourself as an individual, it can be helpful to create an LLC. This limits your personal liability for business decisions and mistakes your employees make, so it helps protect your personal finances. It also establishes your business as a separate entity from yourself formally, which can help when you try to establish a separate business credit score. By setting yourself up to create a business credit score independent of your personal finances, you make it less likely that lenders even need to pry into your personal life when you need a business loan.

  1. Track All Money Into and Out of the Business

Sometimes, your business is short of funds and needs additional investment or cash influxes. You need to track all the money you put back into the company and the profits you take from it because your reinvestment needs to be noted to avoid propping up the business with your finances. To fully separate business finances from your personal cash flow, it’s best to rely on something like short-term financing unless it is an emergency. At the very least, though, you should consider those reinvestments to be loans from your own money to the company, to avoid over-paying when calculating your profits for your own taxes.