Mike Andes warns that mixing business and personal funds can trigger tax problems or let creditors come after your personal assets. He describes owners paying truck payments and groceries from business accounts, then explains why you need a proper payment schedule instead.
We're horrible about paying ourselves.
When he's.
When his truck payment's due, we send him money to pay his truck. Like, you know, when we need groceries, send him money to go get groceries. Like, stuff like that.
As soon as you start doing that, you're either A, going against the law by not paying payroll taxes, or B, you are piercing the corporate veil by paying for their personal expenses out of the business checking account or credit card.
But none of us have gotten on a schedule to get paid or anything.
When you need money, you make sure it's like, okay, we transfer money from the business checking to their personal checking. Oh, no, I'm paying myself by paying for the ice cream cones for my kids. Okay, great. I just need that money to go into your account and then from your account to the ice cream vendor, not from the business to the ice cream vendor.
Right, right.
But as soon as I go from the business checking and then I use the company card to pay for my personal expense, I have pierced the corporate veil. And if I pierce that corporate veil, that means if someone was to sue the business, they will come directly after my personal assets due to the fact that I'm not honoring the fact that this entity, this llc, is different than my personal assets.
