• Personal Account: Designed for your salary, personal transfers, or day-to-day living expenses.

• Business Account: Specifically meant for running your business. It helps separate your business money from your personal money.

Example:

• If Chinedu, a fashion designer, receives ₦500,000 in his personal account this month, the tax authority may see it as his income.

• But if it comes into a business account, it’s clearly classified as business revenue.

This difference matters because the new tax reforms are pushing for clarity and transparency.

 Why Mixing Personal and Business Money is Risky

Imagine you sell hair products and:

• Revenue in June = ₦300,000

• Personal birthday gift from a friend = ₦100,000

If both land in the same personal account, how do you prove to FIRS that not all ₦400,000 is business income?

Under the new policy, you may be asked to pay tax on the full ₦400,000, not just the ₦300,000 you actually earned from your hustle.

Tax Brackets: How It Hits Your Pocket

With the new Personal Income Tax (PIT) bands:

• ₦0 – ₦800,000 → 0%

• ₦800,001 – ₦3,000,000 → 15%

• ₦3,000,001 – ₦12,000,000 → 18%

• ₦12,000,001 – ₦25,000,000 → 21%

• ₦25,000,001 – ₦50,000,000 → 23%

• Above ₦50,000,000 → 25%

Scenario A:

• You make ₦2,000,000 in sales through your personal account.

• Tax authority calculates 15% = ₦300,000 payable.

Scenario B:

• Same ₦2,000,000 goes into a business account.

• You submit proper records showing ₦500,000 spent on raw materials, logistics, and packaging.

• Net profit = ₦1,500,000.

• Tax = 15% of ₦1,500,000 = ₦225,000.

Savings = ₦75,000 just because you separated your account and kept good records.

Business Account = More Than Tax Savings

Opening a business account is not only about taxes. It gives you:

• Professional image: Customers trust “ABC Enterprises” more than “Oluwaseun Adewale”.
• Loan opportunities: Banks and fintechs prefer to give loans when they see your business turnover clearly.
• Better bookkeeping: You’ll know what’s business income vs. personal spending.
• Audit protection: If FIRS checks, you can show them clean records.

Practical Example — Meet Amaka

Amaka sells Ankara fabrics online.

• Using Personal Account

  • Sales in July = ₦800,000

  • Boyfriend sends ₦50,000 for weekend enjoyment

  • Total inflow = ₦850,000

  • FIRS may treat ₦850,000 as business income.

• Using Business Account

  • Business Account shows ₦800,000 inflow.

  • Personal Account shows ₦50,000 gift.

  • No confusion. Tax is calculated correctly.

Amaka avoids unnecessary tax bills by simply opening a business account.

What Small Businesses Should Do Now

1. Visit your bank and open a business account (some fintech banks like Kuda, Moniepoint, and ALAT even make it easy).

2. Register your business name with CAC (₦25,000 – ₦40,000) so you can open a business account in your company’s name.

3. Start separating transactions — let all sales and expenses go through the business account.

4. Keep invoices and receipts for clarity during tax filing.

 Final Word

The Nigerian tax system is becoming more digital, stricter, and data-driven. If you’re still using a personal account for business, you’re exposing yourself to higher taxes, confusion, and possible penalties.

By opening a business account, you:

• Pay only what you should

• Look more professional

• Prepare your business for growth

So, dear hustler, SME owner, or side-gigger: October is the best time to stop mixing your personal and business money.

Open that business account today. Your future self (and your pocket) will thank you. To register a new business, click here