Ifeoma runs a catering business in Enugu. She cooks for weddings, office lunches and naming ceremonies. Business is good. Last month, customers paid her ₦1,450,000.
But when she checked her bank balance at the end of the month, there was only ₦210,000 left. She could not explain where the rest went. Some went on rice, oil and gas for jobs. Some went on her children's school fees. Some went on fuel, but she could not say whether the fuel was for deliveries or for church on Sunday.
Ifeoma is not careless. She simply has one bank account for everything. Her business money and her personal money are mixed together, so she cannot see either clearly.
This is one of the most common money problems for Nigerian MSME owners. The good news is that it is easy to fix. This guide shows you how.
When personal and business money share one account, three things go wrong.
1. You cannot tell if the business is profitable. Ifeoma earned ₦1,450,000. Was her profit ₦600,000 or ₦150,000? She does not know, because her school fees, groceries and family transfers sit in the same list as her catering costs.
2. You under-price without realising it. If you do not know your true business costs, you cannot price correctly. Ifeoma may be charging ₦4,500 per plate when her real cost is closer to ₦4,200. That leaves almost nothing for her time or her savings.
3. Tax time becomes guesswork. Whether you are a sole trader or a registered company, your tax is worked out on business income and business expenses. If you cannot show which spending was for the business, you may end up paying tax on money you actually spent running the business, or claiming costs you cannot prove.
Simple test: if someone asked you right now, "How much profit did your business make last month?", could you answer in under a minute? If not, your money is probably mixed.
Separating your money does not mean you need an accountant or expensive software. It means four simple things:
That is it. The rest of this guide shows you how to set each one up.
This is the foundation. Without it, everything else is harder.
If your business is registered with the Corporate Affairs Commission (CAC), as a business name or a limited company, most Nigerian banks will open a business current account in that name. They will usually ask for your CAC documents and a valid ID. Requirements differ between banks, so call or visit your bank first.
If you are not yet registered, open a second personal account and use it only for business. It is not perfect, but it is far better than one account for everything.
Ifeoma opened a business account in the name of her registered business, "Ifeoma's Kitchen". From that day, she told every customer to pay into the new account only.
Tip for POS and transfer payments: update your account details everywhere customers see them, including your WhatsApp catalogue, your invoices and your Instagram bio. If even one old channel still points to your personal account, the mixing starts again.
From now on, every business cost should come out of the business account. That includes:
And every personal cost should come out of your personal account. That includes school fees, groceries for the house, family support and personal fuel.
What if you need to pay a business cost with personal money in an emergency? It happens. Simply write it down and pay yourself back from the business account within the week. The key is that it is recorded, not forgotten.
This is the step most owners skip, and it is the most important one.
When Ifeoma had one account, she took money out whenever she needed it. ₦30,000 here for food, ₦85,000 there for a school bill. She never knew her real "salary".
Now she pays herself a fixed amount from the business account to her personal account on the 28th of every month. To set that amount, she looked at her last six months of sales and costs.
She chose ₦250,000 because it is a figure the business can afford even in an average month. In a great month, the extra stays in the business. In a slow month, she still gets paid from what she saved in the good months.
If you want to go deeper on how to set this number, read our guide on how much to pay yourself from your Nigerian business.
Important: the 30% set-aside in this example is a planning figure, not a tax rate. Your actual tax depends on your business structure and income. Speak to a tax adviser for your own situation.
A separate bank account shows you money in and money out. But it does not tell you what the money was for. A transfer of ₦62,000 could be ingredients, a helper's wages or a new cooler.
That is why you need a simple record with a category for each expense. You can do this in a notebook, but it is easy to lose pages and hard to add up.
In Lucrive, you can log each business expense with the date, amount, category and payment method. The categories include Rent, Salaries, Supplies, Marketing, Transport, Utilities, Professional Fees and Equipment, and you can pick Cash, Bank Transfer, POS, Card or Cheque as the payment method. On the same screen, Lucrive shows you your top spending category, so you can see at a glance where most of your money is going.
For sales, you can issue invoices to customers who pay later and record sales receipts for customers who pay on the spot. Ifeoma now records each catering job the day she gets paid.
Here is what one week of Ifeoma's records looks like:
Now Ifeoma can see exactly where her money goes. For the first time, she can tell which jobs make good money and which barely break even.
Once your money is separate, budgeting becomes simple. You only plan for business income and business costs, without the noise of personal spending.
Lucrive's budget tool lets you set a monthly plan for expected revenue and costs. On the Professional plan, you can also see a variance analysis that compares what you planned against what actually happened, and an annual view of the whole year.
Ifeoma set her October budget like this:
At the end of the month, she compares her actual spending with this plan. If supplies cost ₦610,000 instead of ₦520,000, she knows she either needs to raise her plate price or find a cheaper supplier.
Separating your money is not a one-time job. Old habits creep back. Set a short monthly check-in, ideally on the same day you pay yourself. Ask:
This takes about 20 minutes. Ifeoma does hers on the 28th, right after she transfers her pay.
Watch out for "small" leaks: a ₦5,000 transfer to a cousin from the business account looks harmless. But ten of those in a month is ₦50,000 missing from your records, and you will not remember them at month end.
Three months after separating her money, Ifeoma can answer the profit question in seconds. In September, her business made ₦1,380,000 in sales and spent ₦812,000 on costs, leaving ₦568,000. She paid herself ₦250,000, set aside ₦170,000 and kept the rest in the business.
She also discovered that her small office lunch orders were barely profitable once she counted fuel and packaging. She raised her minimum order and her lunch margin improved immediately.
None of this was possible when everything lived in one account.
You do not need to fix everything at once. Start with Step 1 this week: open a separate account and point every customer to it. Then add one step at a time.
When you are ready to record your sales and expenses in one place and set your first monthly budget, you can create your free Lucrive account. No payment details needed.
This guide is for general information only. It is not tax or legal advice. Speak to a qualified adviser about your own situation.
People and businesses in our examples are illustrative, not real Lucrive customers. Figures are worked examples: confirm your own position with a qualified tax adviser.