Protecting Your Web3 Business: Why Separating Wallets is a Must

Walking web3 business owners and operators through the importance and best practices of separating business and company wallets.

The importance of separating business and personal bank accounts is drummed into every business owner in the traditional business world.

While it might be tempting to stray from this best practice for your Web3 company (maybe you tell yourself that all your transactions are on-chain and it’ll be easy to “sort it out later”), it’s actually even more important in web3. Reputation is easier to lose with all activity publicly viewable on-chain, and risks like hacks and market volatility can leave you owing customers millions of dollars. Without proper wallet separation, you are putting your personal assets at risk.

In this blog post, we will cover the specific reasons why personal/business wallet separation is crucial, and some solutions to make that process easier.

Why should I keep separate personal and company crypto wallets? 

Reasons why it’s crucial to keep separate personal and business crypto wallets include: 

  • Protecting yourself and your company’s liability and reputation
  • Making paying taxes less painful and expensive
  • Better understanding and managing your business P&L
  • Taking advantage of business perks.

Below we go into each of these reasons in more detail.

Protect yourself and your company


There are unavoidable risks to running a crypto business. Whether you are a DeFi company or NFT community, your company is exposed to market volatility, smart-contract hacks, and unexpected regulations. Even the most well-intentioned companies can end up owing millions of dollars to customers or other parties.

If you haven’t protected yourself by both setting up a business entity and properly separating your business and personal finances, you could be on the hook to pay back that money with your own personal assets. To reduce this risk, it’s crucial to set up a business entity (such as an LLC, S-corp or C-corp), and keep separate accounts for personal and business finances. For traditional companies, this means setting up a business bank account. For web3 companies that either receive payment or send payments in crypto, it means additionally setting up a business crypto wallet. 


The proliferation of bad actors and scams has left faith in web3 founders at an all-time low. One personal NFT purchase from a business wallet can spark concerns that your company is, at best, poorly managed, and at worst, a scam.

Because your company’s transaction activity is publicly viewable on the blockchain, it’s crucial to demonstrate to your customers that you are using proper accounting practices. Not doing so encourages suspicion and distrust.

For example, after the FTX collapse, eagle-eyed observers noted that several cold wallets associated with SBF showed movement in the millions of dollars. Since it wasn’t clear whether these were SBF’s personal wallets, or FTX’s company wallets, no one knew whether this was SBF fleeing to Dubai, or bankruptcy lawyers at FTX performing housekeeping. Rumors on crypto Twitter abounded, and contributed to the general sense of chaos and unprofessionalism.

Make paying taxes less painful and expensive

In addition to protecting you and your company, keeping separate wallets will also save you time and energy come tax time. Here is a partial list of tax-filing requirements that are much easier to handle with proper account separation:

  1. Paying state and federal taxes

All incorporated companies are required to pay corporate state and federal taxes every April. This requires calculating profit and loss for the company for the last year. 

  1. Paying estimated taxes

If your company pays estimated quarterly taxes, then calculating your recent income, costs, and deductions is a recurring task that, if done incorrectly, could cause you trouble with the IRS, including paying interest on missed payments.

  1. Calculating capital gains taxes

Since cryptocurrencies like Bitcoin and Ethereum are currently taxed like stock and other property, capital gains taxes are calculated on every sale. That means that if you received even just a few $1.00 royalties in ETH, and later sold some of your ETH for USD, the cost-basis of that sale (and thus the tax owed) can depend on the price of ETH when you received those tiny royalties. Mixing in, say, personal income from staking, trading, royalties, and sales, this can quickly become a nightmare.

  1. Accessing tax credits and deductions

Tax credits like the R&D credit, and deductions for business expenses like software subscriptions and office furniture, can save your company money. The last thing you want is to miss out on them because you used your personal wallet for purchases and forgot to count them.

  1. Issuing contractor 1099’s

Every January, you are required to file 1099-NEC’s with the IRS for every US-based contractor who was paid more than $600 in the previous year. If you paid any of your contractors in crypto, it’s a lot easier to see whether they require an 1099 if all the transactions occurred out of your business wallet.

Better understand and keep track of your business P&L

Maintaining proper personal/business separation makes it easier for you to understand and keep track of your business spending and revenue. Marketing spend is way over budget? Monthly burn is higher than you would like? Having a separate, purely business account enables you to make well-informed strategic decisions.

Are you actually paying for the same SaaS software subscription twice? Missed a payment to a contractor? These sorts of operational errors will be also avoided or spotted faster with a separate business wallet.

Take advantage of business perks

By setting up a separate financial identity for your company, you are able to take advantage of perks - a business line of credit, health insurance, and corporate credit cards - that are only available for businesses and not individuals.

Easy solutions for clean accounting

  1. Create your business wallet(s)

We recommend creating a multi-sig wallet (such as a Gnosis Safe) purely for business expenses. For more information on the best wallets for your company, see our last post

  1. Label all transactions

While all transactions for your business are technically “on-chain” and stored forever, this doesn’t mean that they’re particularly human-readable, especially months later when you’re doing your books or taxes. For every transaction that is executed in your business wallet, record:

  • Transaction hash (with a human-readable description of what the payment was for)
  • Sender address (with a human-readable description of who the sender is)
  • Receiver address (with a human-readable description of who the receiver is)

This record-keeping will make it much, much easier to eventually reconcile payments, file paperwork, and determine whether vendors have been paid.

  1. Get a business credit card and pay the monthly balances with your business wallet

Using a business credit card will simplify your transaction activity from the wallet immensely. Instead of using the wallet to pay for 10s or 100s of expenses every month, creating accounting overhead and cost-basis events, you can make those payments with a credit card and make a single monthly payment from the wallet. This creates a clean record that the expense was business related. As a bonus, using a credit card with a good rewards system can net your company savings and perks.

  1. Use a treasury solution

Web3 treasury solutions like Starlight enable you to handle all your money - crypto and fiat - in one place. In addition to replacing fiat business bank accounts like Mercury, Starlight offers both a custodial wallet for your digital assets and/or integration with non-custodial wallets like Gnosis Safe. Creating new wallets for proper accounting shouldn’t be a headache that causes you to put your company at risk out of laziness. Starlight makes it seamless to set up the correct accounting practices to make your company successful.


The last thing you want to worry about while building in this space is managing the reputational, legal, and financial risks that come with improper accounting. Make sure to keep separate accounts for business and personal expenses, and explore treasury solutions like Starlight to handle all of your accounts (fiat and crypto) in one place.