How to Separate Work and Personal Expenses
Most people carry one card and pay for everything with it. That is fine, and the advice to open a second account solves less than it promises. What actually matters is that each expense records what it was for, and that anything used for both carries a share you can justify.
Updated: 2026-09-09
Short answer
Separation happens in the records, not in the wallet. A second account makes some things tidier but does not decide anything: a work card can still buy lunch, and a personal card can still buy a work laptop.
Give every expense a purpose at the time you record it: work, personal, or mixed. For mixed, record a work-use percentage and the basis you used to get it.
The basis is the part people skip and the part that matters. A percentage you can explain is a record. A percentage you picked because it sounded reasonable is a guess wearing a number.
Separate account, or one card and good records
Both work. They cost you in different places, and the choice is more about your business than about your bookkeeping.
| Second account | One card, tagged records | |
|---|---|---|
| Effort to set up | An application, and moving direct debits across | None |
| Effort per purchase | Choosing the right card at the counter, and getting it wrong sometimes | Tagging the purpose when you record it |
| Handles mixed expenses | No. A phone bill is still part work whichever card paid it | Yes, through a work-use percentage |
| Helps at tax time | A cleaner statement to start from | The purpose is already recorded, per expense |
| Worth it when | You have an ABN with real volume, or a bookkeeper reconciling for you | You are an employee, or a sole trader doing your own records |
Some business structures have requirements of their own about keeping business money separate. This is about record keeping, not about how your business must be set up.
Tagging an expense properly
Four decisions, all of them easier at the counter than in July.
1
Purpose first
Work, personal, or mixed. This is not a category. A laptop is Equipment either way; the purpose is what decides whether it belongs in your work records at all.
2
A percentage for anything mixed
Phone, internet, a tool used at home as well, a car park that was half a client visit. A share is a truer record than forcing it into one bucket.
3
Write the basis down
A short note is enough: hours logged over four weeks, calls counted, jobs done, floor area. The number without the reason is the part that fails a question.
4
Attach the receipt
The purpose and the percentage describe the expense. The receipt is the evidence the expense happened. Keep them together or neither is much use.
How to arrive at a percentage
Pick something countable and measure it for a representative period, usually about four weeks. Hours the internet was used for work against total hours. Work calls against total calls. Days a tool was on a job against days it was in the shed.
Then keep it consistent. Using seventy per cent in one year and forty the next, with nothing recorded about why it changed, is worse than either number on its own.
Redo the measurement when something actually changes: a new job, a move to working from home, a tool that became mainly personal. Note the date it changed, and use the old figure up to then.
Round honestly. A percentage to two decimal places implies a precision your measurement does not have, and it does not make the record stronger.
The four mistakes that cost people the most
Deciding in July
Reconstructing purpose from a bank statement months later is guesswork. The statement shows a merchant and an amount, and neither of those says what it was for.
Claiming a mixed expense in full
A phone bill used partly for work is a share, not a whole expense. Recording it as one hundred per cent work is the single most common error in this area.
A percentage with no basis
The number is only as good as the reasoning behind it. Keep a one-line note of how you worked it out, with the expense.
Assuming the card decides
Which card you paid with is not what makes an expense work related. What you bought and how you used it is.
Do the arithmetic
The work-use calculator takes an amount and a percentage and shows the work portion, plus what it comes to across a year if the expense repeats.
It is a record-keeping aid. It does not decide whether the expense is deductible, or whether your percentage is reasonable for your situation.
Frequently asked questions
Do I need a separate bank account for business expenses?
Not for record keeping as a sole trader or an employee, though many people find it tidier and some business structures have their own requirements. A separate account does not solve mixed expenses, which still need apportioning either way.
What is a work-use percentage?
The share of a mixed expense that relates to your work. It is recorded against the expense along with the basis you used to arrive at it.
How do I work out the percentage for my phone?
Measure over a representative period: work calls and work data against the total. Keep the note that shows how you counted. Current ATO guidance sets out what is acceptable, and a registered tax agent can confirm it for your situation.
Can I claim something I bought on my personal card?
The card is not what decides it. The expense, its purpose and the evidence are. Record it with a purpose and keep the receipt.
What if the split changes during the year?
Record the change and the date, and apply each figure to its own part of the year rather than averaging after the fact.
Is this tax advice?
No. It is a method for keeping records. What you can claim, and what percentage is reasonable for you, depends on your circumstances and current ATO rules.
Read next
Australian references
HeyJerni is a record-keeping tool, not tax advice.
Tag it at the counter, not in July
HeyJerni puts a purpose and a work-use percentage on every expense, remembers what you chose per merchant, and keeps the receipt on the same record.