Why Your Accountant Treats You and Your Business as Separate People: The Entity Concept Explained

Sat, 03 Jan 2026 08:37:49 +0000

If you're a business owner, especially a sole proprietor, you might find it strange when your accountant insists on a strict separation between your personal and business finances. After all, it's your money, right? But in the world of accounting, your business is treated as a completely separate person from you, the owner. This fundamental rule, known as the "Entity Concept," is one of the most important principles for understanding your business's true financial health. This article will break down this concept and explain why it's so crucial for accurate bookkeeping.