The importance of keeping personal and business accounts separate

It can be tempting for entrepreneurs to merge their personal and business accounts, but this decision could spell disaster if your company goes under. Entrepreneur magazine recently outlined several business and financial tips that will help ensure you don't go down if your startup fails.

New York City asset protection attorney Asher Rubinstein advises establishing your business as a corporation or limited liability company (LLC), as opposed to operating as a sole proprietorship or partnership. To underscore the separation between your personal and business expenses, it's inadvisable to use company funds for personal expenses. Open an account for business purposes only, and make sure it's used appropriately. If you're sued, a case could be made that you and your company count as a single entity, and the plaintiff could try to take you for everything you've got – including your investments and your home.

For some entrepreneurs, working from a home office or setting their own schedule can introduce a relaxed mentality. However, don't let that lull you into a false sense of security. It's still extremely important to keep proper books and, if necessary, hold annual meetings.

In the interests of protecting yourself, adding a second, non-spouse owner can go a long way. Thanks to recent case law, it's become easier to prove that LLCs and individuals are indistinguishable, but minority owners that hold as little as 2 percent of the company can help owners make a stronger case for preservation, the news source notes.

Idaho attorney Lance D. Churchill notes that the fewer assets the business has outright ownership of, the fewer can be subjected to seizure if the enterprise goes pear-shaped. Minimize your company's asset holdings by leasing vehicles, machinery and other large pieces of equipment and transferring ownership stakes to limited partnerships or trusts.

Of course, before you can lease business equipment, you have to have the capital to acquire it. In short, it takes money to make money. Business equipment loans from My Bank can help you acquire what you need to expand your capacity, increase your efficiency or add a new capability to your company. Sit down with a My Bank financial services consultant to weigh your options and maybe even learn about a few you weren't aware of. 

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