Tax Tips

17. Do NOT commingle your personal expenses with your business expenses!

Sometimes courts will hold an LLC or corporation’s owners, members, and shareholders personally liable for business debts. When this happens it’s called “piercing the corporate veil.”

https://www.nolo.com/legal-encyclopedia/personal-liability-piercing-corporate-veil-33006.html
  • You spent all this money to set up your LLC to protect your personal assets from liability or creditors should the business be unable to pay its debts or be sued, yet you do not have separate bank accounts.
  • You use your business bookkeeping system to also track your personal expenses or have your personal bank account or credit card linked thus invalidating the separation or your personal assets from your business assets.
  • I understand that Start-ups may need to use personal money to fund their business. The best method is to transfer the funds from a personal account to a business account.
  • If you do not have a business credit card yet, get a second personal credit card and use that for only business expenses.
  • If you do not have a business bank account, open a debit card account. Use this account for business expenses only.
  • Also, if you are commingling expenes, it will take your bookkeeper, tax preparer, or accountant longer to clean-up your books or prepare your tax return thus costing you more in bookkeeping or tax preparation fees.

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Published by Williams Accounting LLC

Williams Accounting LLC is a Las Vegas-based accounting, tax, and financial consulting firm that works with clients to achieve the best solutions for their business.

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