Why it comes first
Almost every later question about a small business — what it earns, what it can borrow, what it owes in tax, what it is worth — becomes hard to answer if business and personal money share an account. Not impossible, but expensive, because somebody has to reconstruct the separation after the fact.
Doing it at the start costs an afternoon. Doing it in year three costs an accountant's time and your own.
What separation actually means
It is a set of habits more than a legal act, and the habits are what an accountant or a lender will look for.
- A business account that receives all business income and pays all business expenses.
- A defined way you pay yourself, on a schedule, rather than transferring when you need money.
- Business expenses on a business card, personal expenses on a personal one, with no exceptions treated as small ones.
- Records kept for the business as its own set of books, not as a filter over your personal statements.
Business credit is its own thing
A business can develop its own credit profile, reported by agencies that are separate from consumer bureaus. It builds slowly and from different inputs, including how the business pays its suppliers.
For a young or small business, personal credit and a personal guarantee usually still matter to a lender. The two profiles coexist for a long time before the business one can stand alone.
What separation does not do
Opening a business account does not by itself create limited liability, change your tax treatment, or protect personal assets. Those follow from the legal structure you have and the jurisdiction you are in.
Choosing a business structure is a legal and tax decision with consequences that differ by jurisdiction and by circumstance. It belongs to a qualified attorney and accountant, not to a general article and not to software.
This is general education, not advice about your situation. It does not decide anything about your credit, taxes, borrowing or legal position — those belong to you and to the qualified professionals you work with.