Stop Mixing Business and Personal Funds. Here’s Why Your LLC Can’t Afford It
Let’s be clear—if you’ve got an LLC but you’re swiping the same debit card for your Target run and your client invoices, you’re playing with fire.
It’s called commingling funds, and it can kill the very legal protection you set up your LLC to give you.
When you mix your business and personal finances, you risk something called “piercing the corporate veil.”
Translation? If your business ever gets sued or owes money, a court could decide your LLC isn’t really separate from you—meaning they can go after your personal assets. Your savings account. Your car. Even your home.
What Is Commingling Funds?
Commingling funds means using the same bank account, credit card, or cash flow for both your business and your personal expenses. This is one of the fastest ways to weaken your LLC’s liability shield.
Examples of commingling:
Paying your Netflix bill from your business account.
Depositing client checks into your personal checking.
Pulling cash from your LLC without any documentation.
Why It’s Such a Big Risk
The whole point of forming an LLC is to separate your personal and business liability. When you blur that line, you:
Risk personal liability for business debts and lawsuits.
Mess up your taxes, which could trigger audits and penalties.
Lose credibility with clients, lenders, and investors.
And here’s the real talk—if you end up in court and a judge sees you’ve been treating your LLC like a personal piggy bank? That legal shield won’t protect you.
3 Ways to Keep Your LLC’s Protection Strong
1. Use Separate Accounts
Open a dedicated business checking account and credit card for all LLC transactions. Keep them 100% separate from your personal accounts.
2. Document Everything
Record all your LLC-related income, expenses, and transfers. If you take money out for yourself, make it an owner’s draw or payroll—and note it clearly.
3. Pay Yourself Properly
Don’t just “borrow” from the business account. Transfer funds to your personal account in a documented, consistent way—either as payroll (if you’re on payroll) or an owner’s draw.
Bottom Line
Your LLC is only as strong as the way you treat it. Commingling funds might feel harmless in the moment, but it can undo years of hard work in a single lawsuit.
If you want to keep your business legally protected, start separating those finances today—and if you need help making sure your LLC is set up the right way from contracts to compliance, check out The Legalmiga Library® or join the Legalmiga® Membership for hands-on legal support.