Co-Mingling Funds – How it Works
Last week we discussed in a FB post the idea of co-mingling. Today we are going to get into more detail about this important subject!
As a reminder, co-mingling funds is when you combine or otherwise entangle your personal funds with your business funds. Some common examples of this is paying personal bills with the company credit card or drafting personal house expenses from the company account or visa-versa. Using personal funds to pay business bills directly.
Keeping your business and personal finances SEPARATE by using the proper accounts for your business income and expenses is VERY important. Among the best benefits of this is increased clarity in your business finances, as well the protection of your personal assets in the event that your business was sued. Many business owners do not realize that they can (in effect) negate the protection of their LLC by choosing to co-mingle funds. There are many precedents where the courts decided that because the business was co-mingled with personal finances, the personal assets were up for grabs too!
What you can do instead of co-mingling funds when you need to pay a personal bill from business funds or pay a business bill with personal friends? There are a couple of ways.
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