The Esthetician Podcast

Bank Account Boundaries: The Lifesaver Your Spa Business Didn't Know It Needed

• Kari Jo

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Financial confusion might be the silent killer of your esthetician business. When you mix personal and business finances in a single account, you're not just creating a bookkeeping headache—you're putting everything you've built at risk.

Drawing from real legal horror stories shared by her attorney brother-in-law, Kari Jo Patterson reveals how courts can "pierce the corporate veil" when business owners intermix finances, potentially exposing your personal assets to business liabilities. One business owner lost half his property simply because he occasionally used his business account for personal expenses. This vulnerability exists even with LLC protection, leaving many estheticians unaware of the danger they're creating with each swipe of the wrong card.

Beyond legal protection, keeping separate accounts provides essential financial clarity. Without this separation, determining your actual income becomes nearly impossible, tax preparation becomes a nightmare, and banks will likely deny you loans when you're ready to expand. The solution is refreshingly simple: establish dedicated accounts for income, taxes, and gift card savings. When you know exactly how much money is coming in, going out, and what's left over, you can make confident business decisions rather than operating from a place of perpetual financial anxiety.

Ready to transform your financial foundation? Take Keri's challenge to open separate business accounts today. For those looking to scale by hiring employees, check out "The Esthetician's Guide to a Profitable Pay Structure" to avoid the costly mistakes that leave many beauty business owners broke and frustrated when they try to expand. Your beauty business deserves the same professional care you provide your clients—starting with proper financial systems that protect what you've built.

To learn more about coaching please visit: https://www.karijopatterson.com

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Links You May Want to Check out:

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Announcer:

Welcome to the Esthetician Podcast, where passion meets prosperity. Your host, Kari Jo Patterson, transformed from a solo esthetician into a successful business owner, achieving ultimate time and financial freedom by the age of 38. Kari is the author of Fearless Prosperity, empowering estheticians to build their empire and achieve financial freedom, and the creator of the Empire Growth System for Estheticians. Get ready for some empire-building wisdom Now. Welcome your host, Kari Jo Patterson.

Kari Jo Patterson:

Hey, beauty pros, if you're still running your business with everything mixed into one bank account your personal expenses, your business revenue, your grocery runs, your backboard purchases well then, this episode is for you. Today, I'm going to be talking about one of the most common financial mistakes that estheticians are making, because nobody told them better, and that is basically keeping your money in the same bank account. And why is keeping you stressed and totally broke? Stick with me until the very end, because I've got something that is going to change your business forever, especially if you're thinking about hiring or paying employees one day. Let's dive in.

Kari Jo Patterson:

I made well, I never made the mistake of actually mixing my business and personal finances together, and it wasn't because I was financially smart when I started my business, but it was actually because my brother-in-law is a lawyer, and he's not just any lawyer. He actually deals with businesses that get sued all the time. So the company he works for is an insurance and they insure businesses that are extremely high risk. So he's constantly, always in court for these high risk businesses that are getting sued. So when I first started my company, literally he told me like okay, straight up, carrie, no matter what you do, you need to have two separate bank accounts and never touch your business account for anything personal not ever. All right, he told me. And that doesn't mean you can't get paid, guys, just so you know. That just means like you, like, you have your business account and you can move money into your personal account. You can pay yourself from your business. It just means you just don't use your business account for your income. But anyways, he told me the most horror stories you could ever hear. I think the story that he gave me. I should have him come on to tell the whole story because I might mess it up, so just take this as like a this was, I don't know 10 years ago or longer that I heard this story. So basically, he told me about how there was a business owner and he was in the process of getting sued and they requested to see all of his bank accounts, bank statements. The other side went through all of his bank accounts and found all these just random little ones, not all the time, but just when he intermixed and used his business account for personal expenses, which he was like an LLC. So when he was getting sued, he shouldn't let, they shouldn't be able to go after his personal side, because they're two different entities. But because he intermixed his finances, the other side was able to be like, well, yeah, you're intermixing, and really you guys are one, it's not both. And so the person that was suing ended up taking half of his property big, huge farmland and literally took half of it. Let's just say, your business gets sued because you ripped someone's skin off, you burnt them. I don't know what you're going to do, right, but guess what? The courts go through years of your financial records and if they see that you are mixing your business and personal funds even if you are an LLC and you are two totally different entities you're you and your business is your business they can then pierce the corporate veil and then come after your personal assets. Never, never, never intermix.

Kari Jo Patterson:

Okay, this story, like when he told me this, it was at the very beginning. It just stuck with me from day one. I always kept my finances separate, but that doesn't mean that I necessarily did everything right. I had another problem. I kept my accounts, but even though I was keeping my accounts separate, the problem became I was too afraid to pay myself out of my business account and that's because I wasn't actually tracking what I was making. Does that sound familiar to you? Why do so many estheticians keep everything together in one account? Well, I thought about it and I came up with one.

Kari Jo Patterson:

You don't know any better. Nobody teaches you financial literacy in aesthetic school to they just think nothing bad will ever happen until it does. My worst story is I hypopigmented somebody from waxing. Luckily it did go away, but I mean that was so scary for me and I have, like, a lot of experience. Some things go bad. They can't go bad, right, anyways. And three it probably just it's easier. But the truth is, is what's easier now is it's only going to become a disaster later on, especially when it becomes tax time.

Kari Jo Patterson:

Keeping one account for everything your business and your personal. It's going to mess up your business in so many ways. One you are going to have no clue how much you are actually making. You know your company is bringing in money, but how much are you actually making? You don't know. Tax season is going to be a nightmare because you just mixed everything together. Have fun figuring all that out. If you ever needed a business loan, banks will deny you because they can't tell what is your business income versus your personal spending. It's going to make it so hard for you to get loans in the future. That's why I don't know. That's why you hear how hard it is for business owners to get loans is because they mess it up. Don't mess it up from the start. And then, of course, like I said, if someone goes to sue you, your personal assets that you have, it could be at risk. So anything that you own outside of your business, it could completely be at risk because your records show that you're not running a real business. You guys are the same thing. You guys are the same person. Even if you are an LLC, everything's all mixed together. You're not separate. This is not something for you to brush off.

Kari Jo Patterson:

What's the very first step that you need to do in order to fix your finances? You need to open a separate business bank account If you're in the US, sharon, I had an episode earlier on. You guys can go back and look. Her name was Sharon from MS or she's misaccounting on. It was an episode that I did on bookkeeping and she actually talks about this, so it will give you more information on that previous episode. She recommended using Wells Fargo because they have the lowest fees right now. That is a great option. She also talked about what kind of savings accounts you need and things like that. You should go listen, re-listen, to that episode.

Kari Jo Patterson:

But whatever bank you choose, make sure you get a dedicated business checking account and a personal Two, totally ones. Two you gotta stop using your business account for your personal spending. That means if you go at the grocery store and you realize that you left your personal bank card at home and you only have your business card, guess what? You leave your groceries, you go home and you get your card and go back and pay for your groceries. Don't intermix them, just don't do it.

Kari Jo Patterson:

And three you need to set up multiple accounts so that you stay organized. This is the one mistake. That or not mistake. Well, I guess it was a mistake, but this is the one thing I wish somebody would have told me. Like my brother-in-law told me to separate my bank accounts, I wish he knew this and could have told me this, because it took me a little bit while to get in and know it is. Basically you need three at least you could do four, but at least three different accounts. You need your income account. So that's where all the money is coming in from Square Regaro and you know your merchant is like collecting the fees. It all goes into your income account.

Kari Jo Patterson:

Then you need to have a tax account. So this is where you move, at the end of every week, any of your sales tax or any of your tax that you want to move over. If you have employees, maybe you move over their employee tax, move it over into that tax account. So you always have it. And so at the end of the year or quarterly, like you're totally fine, and then just have that one bank account linked to the IRS and it will just go out of that bank account. You don't even have to worry about it. And then I recommend having another one which is going to be a gift card savings account. This is basically, if you sell gift cards, you cannot spend that money and, like most people, this is what I did. I say most people, but I'm really talking about myself, because when I started out I would sell gift cards and then I would just go use the money Yay, no, that money, you can't spend it until they come in. And so you got to move it over into a savings account and then you can put it back into your income account after they come in and get that service done.

Kari Jo Patterson:

I know a lot of estheticians avoid finances because it's overwhelming. But keeping track doesn't have to be complicated. You can use QuickBooks if you want an automated system. Honestly, a simple Excel spreadsheet works just as well to categorize all of your expenses. The goal is to know exactly how much money you're making, what you're spending on and what is left over.

Kari Jo Patterson:

Now let's talk about why this matters. And if you want to hire and scale your business, if you don't have a handle on your bank accounts and cash flow, how are you ever going to pay your employees and pay them correctly, and still have a profitable company? This is exactly why I created the Esthetician's Guide to a Profitable Pay Structure. See, most estheticians they try to hire and then they end up broke or frustrated because they didn't structure the pay and they're overpaying on commissions rate or they have a 1099, whatever it is. If you are planning to hire employees or you're even thinking about it, then you need this course.

Kari Jo Patterson:

I'm going to teach you how to create a pay structure that works for your business, how to avoid the biggest financial mistakes. This guide is what I wish I had when I started and it's available now. You can get the link below. Trust me, fixing your financial systems now is going to save you years of stress later. All right, before we go, here is your challenge Go open your business bank account today. If you already have one set up, then make sure you have separate accounts today and start transferring money over. And if this episode helped you, take a screenshot, share it on Instagram. Tag me at Carrie Jo Patterson. I love seeing how you're taking action and building stronger and smarter beauty businesses. I will see you next time on the Esthetician Podcast. Bye-bye.

Announcer:

Thank you for listening to the Esthetician Podcast with Kari Jo Patterson. Each week, Kari brings you real-world lessons on how to grow your empire. To learn more about Kari Fearless Prosperity Mastermind Group, one-on-one VIP coaching opportunities and more visit Kari. That's Kari. See you next week for more insights and strategies on the Esthetician Podcast.

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