Recently I was hired as a bookkeeper for a small manufacturing business. My boss, the owner, uses the business bank account for personal use – and it’s driving me crazy! He withdraws money with a debit card for personal expenses. Last week his wife bought a big screen TV for their home using a blank check he signed from the business account. From one day to the next I never know how much money the business will have. I’ve explained that it’s best practice to separate business and personal funds, but he tells me it doesn’t matter since the business is an LLC and he is the sole owner. Who is right? My boss? Or me? And what should I do?
Business owners should not use a business bank account for personal use. It’s a bad practice that can lead to other issues, including legal, operational and tax problems.
As the company grows, the problems will also grow. That is, if the company is able to grow. Many businesses operated in a fiscally-lax fashion don’t grow the way they should or could.
I suggest you provide the business owner with a copy of this article. It has all the reasons to help you convince him. At the end is a list of best practices same day direct loan lenders to follow.
Why Not to Use a Business Bank Account for Personal
Here are 7 reasons why small business owners should not use a business bank account for personal usemingling raises the following dangers:
1. Makes it tougher to manage cash flow
For example, the business might not have enough funds when an important business bill comes due. Why? Because the owner chooses that precise time to pay personal expenses from the business account.
Some owners look at their bank balance, see there’s money there, and think they can spend it. This could lead to a cash flow crisis.
2. Erodes personal liability protection
An owner of a corporation or limited liability company (LLC) might be held personally liable for business debts due to commingling personal and business funds.
Read moreCan You Use a Business Bank Account for Personal Use?
