When it comes to owning a business, you should always tread carefully when spending and saving your hard earned cash. However, it is essential that you keep your personal and business funds separate. Check out the following article on why it is so important courtesy of LLC Made Easy.
After all the hard work it takes to create a product or sell your service, the last thing most of use want to do is have more administrative hassles. Particularly after you've gone through the effort of forming an LLC.
When you finally make that sale, and collect that check (if you've ever been in business, you know the difference between making a sale and collecting the money), you want to spend it.
I understand.
But, for several reasons, you want to get your ducks in a line first and keep your business and personal accounts separate to avoid commingling of funds.
What exactly is "commingling"?
Commingling of funds means that you are treating your business's money as your own. Some ways to commingle funds are:
- Depositing checks made payable to your business into your personal bank account
- Making withdrawals from your business checking account to pay obviously personal expenses without documentation
- Using the same bank account for your business and personal needs.
- Writing business checks for obviously personal expenses
- Moving money back and forth between your business and personal accounts without documentation
