LLC Questions: Getting paid!

[casonf]

Hi guys,

I am new to this forum and new to owning a small business, but ESPECIALLY new to running an LLC...

I am the sole member of an LLC. I will be selling mobile repair services and taking credit cards over the phone.

I have bad credit, but with an EIN and an LLC, what are the chances of getting a business bank account?

Also, since I am the sole member, can I just dip out of that account for personal use, or do I need to be an employee, 1099'd, or what? Im really sorry if this has been posted before, but the search parameters for these questions are exhaustingly vast.

Any help will be greatly appreciated!

Cason

[AmericanPatriot]

it shouldnt be a problem.

the LLC is a separate entity form you so your credit shouldn't affect your company unless you're handing out director's guarantees and stuff.

[JohnGalt]

I've asked my credit card processing provider about this and they do require an owner or top executive of the company to be associated with the LLC and they will run a personal credit report on this person. You'll need to call a few companies and ask them what their policies are but many times the people you speak to will not be the ones making the decision, the credit card companies need to be careful who they are allowing to make charges to peoples cards. I believe you could get a bank account though, especially if you open it at the bank where your personal account is.

Dipping out of the business account for personal use is commonly referred to as comingling of funds or comingling of assets. This is a bad idea because it leads to the conclusion that you are not running/treating your business like a business which then leads to the "piercing the corporate veil" if you are for some reason involved in a lawsuit. This means that you are likely to lose the protection afforded by the LLC and your personal assets could be put on the chopping block.

You can pay yourself a salary, give distributions, or possibly extend a loan from the business to yourself (write up and sign an actual loan document in case you are questioned as to whether it is really a loan). You should consult your accountant about the best way to do this so you make sure to minimize your tax liability and ensure that you are keeping your business and personal dealings separate.

Best of luck

[zeppelin2036]

Does the salary have to be fixed?, One of the main reasons I started my business was that I needed a lot more money, how much are you allowed to take and can you pay differently each month?

I've asked my credit card processing provider about this and they do require an owner or top executive of the company to be associated with the LLC and they will run a personal credit report on this person. You'll need to call a few companies and ask them what their policies are but many times the people you speak to will not be the ones making the decision, the credit card companies need to be careful who they are allowing to make charges to peoples cards. I believe you could get a bank account though, especially if you open it at the bank where your personal account is.

Dipping out of the business account for personal use is commonly referred to as comingling of funds or comingling of assets. This is a bad idea because it leads to the conclusion that you are not running/treating your business like a business which then leads to the "piercing the corporate veil" if you are for some reason involved in a lawsuit. This means that you are likely to lose the protection afforded by the LLC and your personal assets could be put on the chopping block.

You can pay yourself a salary, give distributions, or possibly extend a loan from the business to yourself (write up and sign an actual loan document in case you are questioned as to whether it is really a loan). You should consult your accountant about the best way to do this so you make sure to minimize your tax liability and ensure that you are keeping your business and personal dealings separate.

Best of luck

[casonf]

I hear that as long as you keep separate accounts, and transfer any money you need to a personal account, it shouldn't be a problem. Since I am a sole member, I am privileged to 100 percent of profits and losses. Am I right? Can anyone confirm? Thanks!

Cason