Business Checking Or Personal Checking

[Asher Knudson]

I'm trying to get some answers regarding what kind of bank account I can use for my rental property. I have an LLC so I'm wondering if I can use my personal checking for my business or if I'm required to have a business bank account? The reason I have an LLC is my lender required me to get the loan under an entity rather than my personal name. But it is only me in the LLC so I'm wondering if there is really a need to have a business banking account.

Any thoughts?

[Matthew McNeil]

I'll answer the "it is only me in the LLC" comment.

A single-member LLC is considered a "disregarded entity" by the IRS and the LLC's activities will be reflected on the owner's federal 1040 tax return. So, there's no point having a separate bank account aside from convenience to separately keep track of your banking.

However, if you're wanting the LLC to help provide Asset Protection then you need to consider additional factors because Asset Protection and Single Member LLC's are rarely synonymous in the real world. If you're faced with a lawsuit the court may determine its not a separate entity and thus may not be used to protect the assets of the LLC.

I'd encourage you to restructure your LLC, file a 1065 Tax Return and place bank account, insurance policies, rental contracts, etc. in the name of the LLC including Quitclaiming the property into the LLC.

I am not an attorney, but I’d encourage you to seek the advice of an attorney to help you with Asset Protection. There's also many Asset Protection forums here on BP if you do a search.