Q: Should I electronically link my business checking and personal accounts at my local bank?
I own real estate and have a dedicated LLC business checking account at my local bank for it. This account is separated and there is *no* link to my personal account at the same bank. However, the no link is getting to be a hassle for transferring money because I must write a check to myself every time. The transactions/accounting for both are definitely kept separate.
Thinking in terms of liability and litigation, should I go ahead and have my bank electronically link these two accounts? I mean there are all kinds of tenants these days and some are more worrisome than others. I consider myself to be a good landlord though and would never give tenants any reason to pursue litigation.
Thank you very much in advance for your advice!
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A:
When managing both personal and business finances under the same bank, the convenience of linking accounts can be appealing. However, it's important to weigh this convenience against potential risks, especially concerning liability and litigation. Keeping your business and personal accounts separate not only helps with clear financial management but also provides a layer of protection against personal liability for business debts or legal actions.
Linking your business checking and personal accounts electronically could potentially blur the lines of separation between your personal and business assets. In the event of a lawsuit or debt collection against the business, having distinctly separate accounts can be a crucial factor in protecting personal assets. Courts often look for a clear demarcation between personal and business finances when determining liability issues.
Before making a decision, it might be beneficial to discuss your specific situation with a professional advisor familiar with business law and finances. They can provide personalized advice on how to maintain the necessary separation between accounts while still managing the practical aspects of transferring funds. Solutions such as online banking features specifically designed for business owners might offer the convenience you're looking for without compromising the legal separation between your personal and business finances.
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