Personal vs Business Account in Nigeria: The Costly Mistake Entrepreneurs Make

If you don’t separate your business and personal finances, you are setting yourself up for debt, government trouble, or even jail time.

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Team THRIVE
December 09, 2025

Personal vs Business Account in Nigeria: The Costly Mistake Entrepreneurs Make

Many small business owners and new entrepreneurs in Nigeria continue to struggle with one key issue: distinguishing between personal and business finances. And it’s not just new entrepreneurs; even old takers still fall into this trap.

Think about it, if your mom ever ran a petty trade shop back in the day, did she have a dedicated business account? Probably not. Most likely it was: “Send it to my husband’s account, I’ll call you when I get home if I don’t see the alert.” 

Until fintechs like Moniepoint, Prospa, and OPay started giving POS machines to market women, many businesspeople were perfectly fine running everything through one personal account. But here’s the truth: keeping just one account for both personal and business transactions is a big risk for any business.

In our previous blog on how to choose the right structure for your business in Nigeria, we explained how separating yourself from your business legally is crucial. The same applies to money. If you don’t separate your business and personal finances, you are setting yourself up for debt, government trouble, or even jail time.

Yes, you read that right, jail time!

So in this blog, let’s break it down:

  • Why you need a business account

  • What happens when you mix personal and business money

  • Real-life case study of a Nigerian startup (Mr. Joe’s story)

  • The easiest ways to open a business account in Nigeria

Table of Contents

Why Do You Need a Business Account?

I know what you are thinking: “Why should I bother with a business account? Isn’t it just for collecting money? As long as I keep proper records, I’ll be fine.”

Okay, madam accountant, let’s be real. Even if you somehow manage to perfectly track every inflow, outflow, transfer, and debit from your mixed account, once your business is registered (and it must be registered), things change.

Taxes enter the chat. Both personal income tax and business tax.

Once registered, the FIRS (Federal Inland Revenue Service) has visibility into your accounts. They can see how much money you are making and use that to calculate how much tax you owe.

Risks Associated With Using Your Personal Account for Business

Here’s what happens if you run business transactions through your personal account:

  • The more money that enters your account, the higher your personal tax bracket. You will get taxed as an individual, and your business will also be taxed.

  • Without proper bookkeeping, your records may look suspicious. FIRS can easily assume you are trying to evade tax.

  • If you collect VAT (7.5%) and pay it into your personal account, that’s already a compliance red flag. Remember, VAT belongs to the government, not you.

Risks Associated With Using Your Business Account for Personal Expenses (Case Study: Mr. Joe)

Now this one is worse. FIRS monitors business accounts closely. Every inflow is considered revenue, and every outflow is considered a business expense.

Let me gist you about Mr. Joe.

Mr. Joe registered a startup in 2022. He was building an e-commerce platform and, like many founders, he wasn’t making money at first. Between 2022 and 2025, his total revenue barely hit ₦100,000 because most of the time was spent developing his software.

But Joe’s mistake? He used his business account for everything, including buying lunch, paying rent, and even collecting “urgent 2k” from friends and family.

To him, no wahala. To FIRS, big wahala!

When they audited him, FIRS treated every single credit alert as company revenue. Before Joe could say, “But it’s personal money,” FIRS dropped a huge ₦22 million tax bill on his desk.

He begged. He explained that his real business income was only ₦100k. But FIRS didn’t care; the financial statements spoke louder.

In the end, poor Joe had to pay ₦5 million from his personal pocket just to stop them from shutting down his business.

What Mr. Joe Could Have Avoided

If Mr. Joe had separated personal and business finances:

  • FIRS would have only seen business expenses and the actual ₦100k revenue made.

  • He would have been taxed fairly, based on real revenue.

  • He wouldn’t have lost ₦5 million while still struggling to grow his startup.

That’s how one simple mistake, mixing personal and business money, can turn into a nightmare.

5 Easy Options to Open a Business Account in Nigeria

The good news? Getting a business account today is very easy. With fintechs and digital banking, you don’t even have to step into a banking hall. Here’s a list of what you will usually need:

  • Bank Verification Number (BVN)

  • National Identity Number (NIN)

  • Corporate Affairs Commission (CAC) Certificate

  • Tax Identification Number (TIN)

1. Prospa

Prospa is a fintech built for businesses. You can open a business account, send invoices, schedule automated bill payments, manage transactions, and even set up your CAC registration, all from the app.

2. Moniepoint

With the Moniepoint Business App, you can manage accounting, control transactions securely, and even assign access to staff. Need a POS? Moniepoint delivers to your doorstep.

3. Kuda Business

Kuda offers a simple, clean interface for managing business finances. It is beginner-friendly and great for entrepreneurs who want everything digital.

4. Commercial Banks (Zenith, Wema, TAJ, etc.)

Traditional banks are still reliable. Some may require extra steps (like a referee for Zenith), but you can often request digital forms from customer care without going to a branch.

5. OPay Business

OPay also offers business accounts and POS services, making it easy for traders and small business owners to manage transactions on the go.

Final Word

You and your business are two separate entities. Never keep business money in your personal account or personal money in your business account.

Opening a business account is easy, improves your business credibility, and prevents painful risks like shutdowns or unfair tax bills. Customers also trust you more when they send money to your business name instead of your personal name.

If you don’t have a business account yet, today is the best day to create one.

Be like a smart CEO, not like Mr. Joe.

Team Thrive

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Motivational Message

A few lines to keep you motivated, going and on top of the world

Overthinking won’t build your business.

You can’t think your ways to sales.

You only act your way there.

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