Which accounts should I have as business accounts and which accounts should I have as personal accounts?

Venus Ann MichaelProfit Strategist

Ask Mike -Business VS Personal Accounts For Profit First

3 Sept 2019 · 1 min

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Mike Michalowicz explains how to handle business and personal accounts under Profit First. Keep all money in business accounts until you formally distribute it to yourself. The right setup depends on your business structure: LLCs have flexibility, but S Corps and C Corps need separate business accounts.

Questions this video answers

Make everything a business account whenever possible. For LLCs, business and personal accounts can be mixed; for S Corps or C Corps you’ll need distinct business accounts; sole proprietorships may be forced to use personal accounts. Keep the owner's pay in the business account until it is transferred out to your personal account, at which point it becomes personal money.

Chapters

Welcome to Ask Mike. This is Mike Michalowicz. And this question came in from Kevin Allman, maybe one of the Allman brothers, just so you know. So here's his question. He says, mike, which accounts should I have as business accounts and which accounts should I have as personal accounts? When it comes to profit, first here's the rule of thumb. Make everything in business account. Make it that simple. Now, if you have an llc, they could be business and personal accounts mixed together. If you have an S Corp or C Corp, you're probably going to need to only do business accounts if you're a sole proprietorship. In that case, you actually may be forced to do personal accounts. The rule of thumb is when you can just have everything be a business account because the money that flows through the business is for the business's use until it disperses to you. So even the owner's pay, Kevin, when money goes into owner's pay, even keep that business account when it transfers out of owner's pay to pay you, that's when it goes and becomes your personal money.