I often receive the following question from ex-pats starting freelance work in Japan.
"I'm thinking of using the blue return system, but how should I think about the bank account to receive revenues? I have already opened a payment account for a credit card for personal shopping, etc. Is it okay to use it for both household and business purposes?"
You can file blue paper even if you have household and private money in and out of the same bank account.
However, I strongly recommend having a dedicated account for business if you aim for efficient bookkeeping blue returns.
目次（Table of contents）
Saving time to record daily transactions
To be eligible for a special deduction of 550,000 yen to 650,000 yen from taxable income under the Blue return system（※）, sole proprietors have to keep accounting books of the transactions per the principle of double-entry recording procedure（※※）.
※：Please see the National Tax Agency materials for an overview of the Blue return system.
Blue return system
※※： The double-entry recording procedure is a way of journalising to keep an eye on the "dual effects" each business transaction has upon an asset, a liability, or sole proprietors' earnings.
Then, the culmination of accounting books will be the "Financial statement for blue return", which is the required attachment for the blue return.
And this statement includes the balance sheet. Of course, the bank account where you collect sales or pay business expenses is included.
In other words, if a household's money flows are there, each transaction in the account throughout the year is also subject to a "journal entry" in the double-entry recording.
Of course, suppose you properly journal to distinguish household transactions from business ones. In that case, you can prepare the "Financial statement for blue return" even if both business and household transactions are in the same account.
However, compared to the case of habing a dedicated account, it is clear that journalising is more troublesome.
Any taxpayer, not just sole proprietors, may be subject to a tax audit by tax authorities.
At that time, the tax office will check whether the submitted tax return forms match the bankbook data held by sole proprietors.
Therefore, if you use the same bank account for your household, they will naturally see your household money flows and balance.
It's not a direct problem per se, but it could be more pleasant if you separated.
Easy to get a feel for business performance
You can get an overview of your money flows or business performance by just looking at your passbook.
Of course, in the case of a sole proprietor who uses their home as an office, house rents, utilities, etc., are household-business-overlapped costs.
For the tax return, you must distinguish between the two in a well reasonable manner.
However, you usually divide such expenditures once a year or through the year-end adjustment to finalise necessary expenses（※）.
※：Please also refer to the following blog for essential matters related to necessary expenses.
At the end
Considering how to manage bookkeeping efficiently, I recommend having a dedicated account for business.
Usually, when starting a sole proprietorship, there may be fewer money inflows and outflows than households.
Therefore, you may think, "Okay. I'll use a household account for a moment…".
However, journalising to distinguish household transactions from business ones is more handful than you imagine.
Suppose you already have set up an automatic transfer account for rent or utility bills. In that case, it's one way to open another account for the household while using this existing one for freelance work.