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Seperate bank account for LLC in CA

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kmclaurin

Junior Member
California
Hi, I just set up an LLC in CA for my small consulting business, primarily to protect my personal assets. I am the only employee. Do I need to setup a seperate bank account for the LLC and deposit payments my clients make to me into that LLC? If so, can I use that account directly to pay my personal mortgage, day to day personal expenses, etc? Or do I have to start paying my self a salary from that account? Otherwise, it seems like it could be considered 'funneling' money to myself from the business.
Thanks
 


Antigone*

Senior Member
California
Hi, I just set up an LLC in CA for my small consulting business, primarily to protect my personal assets. I am the only employee. Do I need to setup a seperate bank account for the LLC and deposit payments my clients make to me into that LLC? If so, can I use that account directly to pay my personal mortgage, day to day personal expenses, etc? Or do I have to start paying my self a salary from that account? Otherwise, it seems like it could be considered 'funneling' money to myself from the business.
Thanks
I suggest you don't muddy the waters and mix your personal with your business. Open a business account and use that only for your business.
 

tranquility

Senior Member
Not handling your business like a business by mingling assets is a fact people can use to pierce the corporate veil under the alter ego theory.

Open a new account for your business.
 

kmclaurin

Junior Member
Thanks. We are talking about a small <80k a year business. So I set up a business bank account, deposit my clients payments into that account, then pay myself a salary from that account to my personal account. Seems like just a paper work shuffle, but I see your point(s).
 

LdiJ

Senior Member
Thanks. We are talking about a small <80k a year business. So I set up a business bank account, deposit my clients payments into that account, then pay myself a salary from that account to my personal account. Seems like just a paper work shuffle, but I see your point(s).
If you are a single member LLC then you are a disregarded entity for tax purposes and you would file a schedule C on your personal tax return.

Therefore you would not pay yourself a salary per se, you would simply be taking distributions from the LLC. I do agree however that for liability purposes it would be wiser to have a separate bank account for the LLC and then write yourself distribution checks.
 

tranquility

Senior Member
Don't forget the IRS fun. If you keep all your books in one program, the IRS has full access to it. It is best to keep your personal books completely separate from your business books. At least in the near future (It will be extended someday with the same reasoning.), the IRS has said they will be routinely requesting computer records of small businesses on audit. Too bad if your personal accounting is intertwined.
 

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