Business and Personal: Work and Play Don’t Mix
Failure to keep business and personal property and finances separate can result in personal liability to the owners of a company. As an owner, it is imperative to maintain your business, whether it is a corporation, limited liability company, partnership or other form of business entity separate from your personal property and finances, as failure to do so may result in personal liability.
A corporation or limited liability company is its own juridical entity, meaning in the eyes of the law, the company is separate and distinct from its owners. The business can for example own property, acquire financing, and enter into contracts in its own name. However, to maintain this status, certain formalities must be followed, some of which are:
The business should be managed on a day-to-day basis so it's completely obvious to the IRS and other governmental entities that the business is a separate entity.
The business should maintain its own banking accounts.
The business should have a tax identification number called an Employee ID Number, (EIN).
All transactions between a business owner personally and the business should be routinely documented to establish the business as a separate entity.
The business should maintain separate tax filings from that of the business owner, and a business.
Starting and maintaining a business can be complicated, The Kyle Law Firm can help you get started, give us a call at: 225-293-8400.