Using business account for personal spending...

**robousy** · 04-11-2009 05:45 PM

I run a 1 man consulting LLC and all my income is essentially my salary. I have no real expenses or overheads as I work from home on my laptop.

Would anyone advise against using the money in this account to pay for everyday living expenses and using it as a 'normal' checking account?

Are there any legal issues here about the money being used specifically for business related activities??

Thanks in advance.

Rich (ard)

**chrispalko** · 04-11-2009 10:05 PM

Have you found yourself an accountant yet?

I think that would be your best bet.

You must keep track of everything for when tax time comes around.

(don't take my word, please seek professional help) Considering you're an established LLC, I "believe" that you write a check from your business to yourself and record it as salary in your books. Depending on how you elected to be taxed, there may be other details I missed.

I have two main incomes, though my hosting business's revenue stays in that account, and I use my freelancing income to take care of personal expenses.

**djmiller1130** · 04-12-2009 01:45 AM

i would advise against using it for personal expenses. it would cause a mess at tax time

i did that several years ago and my accountant threw a fit.

**robousy** · 04-12-2009 10:42 AM

ok - thanks for clarifying for me. I was about to start using it as a normal account, but thought I'd check first. I know better now!

**Chris Brooks** · 04-12-2009 10:51 AM

Always a good idea to get an accountant on your side. In any sort of a business just to be on the safe side you should set up a checking and savings account in the business's name. That way there is no mixing of funds at tax time and I know in several states it is against the law to mix business and personal funds.

**BusinessAdviser** · 04-12-2009 11:33 PM

To answer your question, I would advise against commingling your personal and business funds. It's about the quickest way to have your corporate veil pierced, losing your limited liability protection.

**pboychuk** · 04-13-2009 02:03 AM

Besides piercing the veil I dont see why it matters, you can't get in trouble tax wise, all your income is distributed directly to you personally anyways, its not like by keeping the money in a business account your tax structure will be any different, you must pay taxes on the full amount anyways, by writing yourself a check as salary is like writing a check from one personal bank account to the next... I am sure I am giving bad advice but I just don't see why everyone flys of the shelf and says hire an account and an attorney spend as much money as you can to make sure you are the text book model of how a business should be set up. Especially as a consultant where you can't really be sued and probably don't need to build business credit.