What is the best way to separate my personal finances from my LLC?

Keeping your personal and LLC finances separate are an important aspect of ensuring that you retain the liability protection of your LLC, which can be lost if you “commingle” funds.

The best way to do this is by maintaining separate accounts for your LLC, ideally in the LLCs name. This means a separate bank account, separate PayPal account, business credit card, etc.

If you need to make a business purchase using personal funds, you should first deposit those funds into the LLC account as an owner’s contribution, then make the purchase out of the LLC account. If that is not possible and you do make a purchase using personal funds, keep the receipt and contribute the purchased item to the LLC using the receipt to track the value of the owner’s contribution.

Similarly, you should not make personal purchases using your business accounts. If you need to use the money you earn through the LLC to make a personal purchase, you should first withdraw that money as an owner’s draw, then make the purchase from your personal account.

It can be simple things like failing to keep separate accounts that can cost your business to lose the liability protection of an LLC. An attorney knowledgeable in this area can help you avoid this pitfalls and save you from potentially costly mistakes down the road. LawTrades can connect you with one of the skilled attorneys in our network for a free 20 minute consultation to discuss how they can help you improve your LLCs operations.