Business vs. Personal: Benefits of Separation
It is hard work starting up a company. The last thing you want to do is create
problems that turn into issues down the road! Many small business owners start
using their business account for personal expenses or vice versa. To fix this you
first need to separate business and personal accounts and the next step review
every transaction and correctly classify them. This can be time consuming,
however it is crucial for proper accounting.
Using your business income to pay for personal expenses you also violate the
“corporate veil” that protects you from the liabilities of the company. You may
ask what is this corporate veil? To put it layman’s terms, it basically means “a
legal concept that separates the business or corporation from each shareholders,
owners and partners, and protects them from being personally liable for the
company’s debts and any other obligations.” If you continue using your business
account for personal expenses, you are basically stating that there is no difference
between your business entity and you. If your company get sued, they can go
after your personal assets. No business owner wants that!!!
If you are a sole-proprietor or a single-member LLC you really can pay yourself
whatever amount you would like, and how often you would like from your small
business. Simply write a check from your business checking account to your
personal account, or transfer funds from your business account to your personal.
It is that easy. Just remember at the end of the year you will be liable for self-
Contact Business by FR8 if this has happened to you, we can help get your books
in order because “Our business keeps you moving!”