Attorney on Call – Small Business Bank Account Question
This is a question from a small business owner regarding her corporate finances.
We had a telephone call from one of our micro business owners regarding finances with her business. She is enrolled in our Attorney on Call Program.
As the questions come up fairly often, I thought I would do a short blog piece to provide the answers for others who may have the same questions.
If she has to put money back onto the corporate account to pay bills, how should she go about that?
Think of yourself as acting as the bank to your corporation. You are going to make a loan to the company. You want to keep an accurate record of what was lent and what was paid back. You want to make sure that you make a notation in your personal check register that you are making a loan to the corporation. You should pay the loan back as soon as practicable.
If the corporation is unable to repay the loan, please make sure that you let us know so that we can update your corporate records and keep track of it on the paperwork. If you ever get audited by the IRS, they are going to ask for the paperwork related to the corporate approval of the loan.
Also, if she pays corporate bills with her personal checking account, how does that work?
Ideally, you will not pay any corporate bills with your personal checking account except during the time when you are getting your business entity established. So, dude only so long as absolutely necessary.
Keep track of what you’ve paid to the corporation and reimburse yourself with a check from the corporate bank account.