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If I Have an LLC, Must I Pay for All My Business Expenses with My Business Account?

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Q: If I have a LLC, must I pay for all my business expenses with my business account?

A: That’s a good question. But lets talk about best practices first and see if that doesn’t clear it up. 

No matter what type of business you have – LLC, corporation, or sole proprietorship – an accountant or financial business advisor will usually recommend that you have a separate business account.

There’s a few reasons for this. First, it simplifies things by keeping business and personal finances separate. Less mingling means less confusion and less paperwork come tax time.

Sure, we could track all the money back and forth and have receipts and documentation for how the money was spent and from which account, but you can eliminate the hassle and the headache if you just stick with funding business activities from the business account.

Second, when you mingle your accounts you’re weakening the legal liability protection an LLC provides. With an LLC, the courts basically consider you and your LLC two separate entities. This is a huge advantage if you’re taken to court.  Someone can sue your business, but they won’t be able to sue you personally, unless you’ve personally guaranteed something.

If you mingle your business and personal accounts, the courts could potentially go after you as an individual, citing that the fact that it looks less like you’re running a separate entity and more like your personal finances and business account are one and the same.

Looking for more tax tips for bloggers? You’ve come to the right place. Check out our FREE Taxes & Accounting for Bloggers 101. You’ll find useful tips and ideas on making your blog finances a breeze. Still have questions or want to hire an expert? We can help with that.

Check out our other Tax & Accounting FAQs for bloggers here:

What is the biggest tax mistake bloggers make?

How do I figure out if I deduct all or part of my new computer?

If I have an LLC, must I pay for all my business expenses with my business account?

Can I count digital products I give away for review as expenses?

What can I deduct for this blog conference? Are clothes deductible?

What is the best way to keep track of the little expenses that add up over the year?

What potential business expenses might I have as a blogger?

What do you suggest bloggers do when given free stuff as compensation?

What percentage of my work time do you recommend I spend on accounting?

 

Ben Sutton

Ben Sutton

Ben Sutton is the founder of Mazuma USA, an accounting firm providing tax, bookkeeping and payroll services to small businesses. Since founding Mazuma, Ben has established himself as an expert in the small business world. He’s still driven by that same desire to provide accounting help to all small businesses – from photographers, bloggers and creatives to lawyers, doctors, and dentists, everyone needs affordable accounting help. Ben is a Certified Public Accountant, and a member of the American Institute of Certified Public Accountants. But Ben considers his greatest achievement and credential to be his happy wife and four children.

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