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.

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…

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.

Andrew Gale – Incorporation Attorney
Attorney at Law Offices 1820 West Orangewood Avenue, Suite 104a, Orange, CA 92868
Office: +1 (714) 634-4838. I provide legal advice, counseling and related services to entrepreneurs including the formation and management of their corporations and estate plans.

My Law Office is based in Orange County California and I have practiced law for 30 years. I have given advice to more than 1000 small business owners on the best ways to set up a company, what types of business entities (corporations, limited liability companies, partnerships) are best suited for them and their small business, how to legally run the business to protect their assets and how to successfully transfer the business to family or key employees through the proper use of estate planning and trusts.

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