Newsletter

Commingling Accounts: Keeping Business Accounts Separate from Personal Accounts

By: Mike Ward EA, OC Tax LLC

 

As a seasoned Tax Professional at OC Tax Service in Berlin, MD I have had the opportunity to meet and work with many talented and driven small business owners.  New and experienced entrepreneurs alike make the common mistake of comingling there business and personal accounts thus leaving themselves vulnerable to costly legal and financial roadblocks. Piercing the “Corporate veil” is a legal concept used in law suits to access your personal assets. This happens when businesses and individual shareholders or company owners commingle funds and/or accounts.   Keeping accurate records and making sound financial choices when setting up your business structure can save many headaches.  These are the most common mistakes, and steps that can be taken to avoid future complications.

Common Mistake:

  • Using 1 bank account for personal and business activities
  • Paying personal expenses with a business credit card or writing checks for personal expenses from the business account.
  • Using personal accounts to pay business expenses
  • Depositing company funds into personal accounts
  • Mixing bank accounts with multiple businesses

Solutions:

  • Use a separate account for all business activities
  • Never pay personal bills with business accounts.
  • Keep accurate records of any business expenses paid with personal funds and issue corresponding reimbursement checks.
  • If you have multiple businesses keep accurate records and maintain separation on all activities.
  • Have a qualified professional help when structuring your financial workflow and account set up.

Setting up a company for accurate bookkeeping is a quintessential tool for the success of any size business. Small individually owned businesses struggle with allotting the proper time for administrative duties such as bookkeeping and tax preparation. OC Tax LLC has qualified professionals available for services ranging from basic consultation all the way to full service on site bookkeeping.  We can customize a Tax and Bookkeeping package that works best for your individual needs.

 

 

Previous Newsletters:

Tax Help! by: Mike Ward, EA

Ocean City Today Article: OC Tax Service serves customers on Racetrack Rd

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