Can my LLC have a business-casual bank account?
February 1, 2018 12:28 AM   Subscribe

I am in the process of setting up an LLC in the US. Unfortunately I'm going to be out of the country for a bit. This doesn't present impediments for setting up the LLC but does for a business bank account (or any bank account). I know that the bank account for your LLC and your personal bank account must be separate. I have a personal bank account that I have not used in a very long time (don't ask, long story). If I use this as the bank account for my LLC until I get back to the country and can set up an Actual Official(TM) Business Bank Account, is that likely to be sufficient as a band-aid or am I completely screwed with the IRS? YANMA(ccountant).
posted by rednikki to Work & Money (5 answers total) 1 user marked this as a favorite
 
Best answer: I am not an accountant but I have operated an LLC for two years and no one has come knocking on my door about bank accounts. I do have a separate account (a regular checking and savings account) that is separate from my day-to-day family expenses account. But I track my income and expenses diligently so going into that account is unnecessary for "keeping my personal expenses separate from my business expenses."

Of course, this is a good question for your accountant if you have one. But keep in mind how much money you are handling for your business. If you are making modest sums of money and tracking your business well then I wouldn't worry about the IRS. Even if you mess up, your fines or issues to correct would be minimal. If you're making significant money then it's best to hire the right professionals to do things correctly.

Short answer: I wouldn't think twice about doing this.
posted by amanda at 6:06 AM on February 1, 2018


Best answer: I am not your lawyer or accountant; go get expert advice tailored to your situation and jurisdiction.

If you haven’t taken the extra step to “check the box” on the LLC by filing an IRS Form 8832 (and you may well not want to, given the extra level of tax that would be required, and the obligation to file corporate tax returns), for tax purposes you and the LLC are alter egos. The LLC is a single member disregarded entity and you would report its income on your own tax returns. As such, from a tax perspective, using the personal account may not be a big deal at all. Did you / will you even be getting a TIN for the LLC?

However, you may lose any liability shield the LLC otherwise could have provided. By using your personal accounts for the LLC, you give a potential claimant an easy way to reach all of your personal assets whereas if you had respected the legal form, their claims might have been quarantined at the LLC level.

Whether that’s important is for you and your advisors to consider.
posted by Admiral Haddock at 6:06 AM on February 1, 2018 [2 favorites]


I'll add further that I pay myself with regular monthly paychecks that transfer from my separate account that I use for business to my other account that is for family stuff and paying personal bills. But, again, I keep logs of everything. Track your expenses and mileage using an expense tracker app. Track your income in a spreadsheet as it comes in. Documentation goes a long way to keeping your business on track and covering your ass in the future.
posted by amanda at 6:14 AM on February 1, 2018


Best answer: I believe the IRS is more concerned with what money is clearly identified as LLC vs personal, for which separate accounts clearly defines, but if you are doing the extra accounting footwork to clearly delineate money, you're likely to be OK. The IRS is only going to ask for banking information if you've got large transactions ($10,000 or more) or if you're audited, on a smaller scale than that the IRS isn't too concerned on a day to day basis.

But, definitely get legal advice for 100% assuredness.

Also, your bank may be able to change the owner of the existing bank account to the LLC over the phone and/or via fax/email -- then if you need a new personal account, you can open that on your return.
posted by AzraelBrown at 6:30 AM on February 1, 2018


This is somewhat off topic, but the cheapest business account I found was with a Credit Union.
posted by Ferrari328 at 10:49 AM on February 1, 2018


« Older English prepositions with regards to vehicle type   |   Manipulated by employer--how do I get my career... Newer »
This thread is closed to new comments.