Tips for New Business Owners – No Co-mingling

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By now, I’m sure we’ve all heard of the great resignation. Are you part of it?

This is Judi Otton with GrowthCast and today I am kicking off a series for new business owners. We know a lot of people have left their jobs in the past couple of years. Many of them have launched new ventures. If this is you, Congratulations! It’s an amazing experience. It can be scary too. But over the next series of videos, I’m going to give you some tips on how to make your business as successful as possible.

Today we’re going to talk about co-mingling. What is co-mingling? It sounds like fun. It’s not. Please don’t do it. Co-mingling is when you’re merging or mingling your personal financial accounts and your business financial accounts. And I will tell you why this is a bad thing to do. But the first thing I want to do is say, as soon as you decide to open a business, open a checking account, open a credit card for the business.

You don’t want to be co-mingling for the following reasons. First of all, it makes it really hard to see how your business is doing financially. When you have all of your financial transactions in one place, it’s much easier to run a business.

Second of all, it’s a very dangerous thing to do from a tax perspective. If you’re co-mingling your finances, there’s really only one entity. When you’re separate if the taxing authorities have an issue with one entity, your business, or your personal, they likely won’t get into the other entity.

And finally, co-mingling your business can do something that’s called piercing the corporate veil. And in short, what this means is if your business gets sued because of something you did negligently, they can come after your personal holdings. So please please please don’t do this. It’s very easy to open a checking account, open a credit card dedicated to the business.

I’ll be back next week with some more tips for you brand new business owners. This is Judi Otton and with GrowthCast with your Fiscal Fitness Tip of the Week.