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  1. #1

    Default Use of a Personal Account Instead of a Business Account

    My question involves business law in the state of: Connecticut

    Girlfriend/business partner has an issue with management of funds from our LLC. I had managed the finances for years. Taxes, bills, etc... The account I used to deposit checks and pay bills was a personal one not a business one.

    It's a separate account set up for exactly this purpose.

    No comingling of funds, only deposits from business, and profits used to pay our bills. Which was the entire purpose of the business.

    She says because it's a personal account it's fraud and embezzlement.

    advice?

  2. #2
    Join Date
    Sep 2005
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    98,846

    Default Re: Personal Account Instead of Business

    If she knew about and agreed to the arrangement, then she's in a poor position to object.

    But it's not embezzlement to poorly manage revenues. The question is whether the proper amount of income was credited to the business, and that the expenses charged to the business were proper. For that, you would look at your business financials and tax returns.

  3. #3
    Join Date
    Oct 2006
    Posts
    16,474

    Default Re: Use of a Personal Account Instead of a Business Account

    What you did was mess up the protections of your LLC. You comingled the funds by putting them in a personal bank account. You need to fix that immediately by opening an account in the name of the LLC. Otherwise, there is no point in having an LLC.

  4. #4
    Join Date
    Oct 2014
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    8,238

    Default Re: Use of a Personal Account Instead of a Business Account

    Quote Quoting zx7ninja
    View Post
    No comingling of funds, only deposits from business, and profits used to pay our bills. Which was the entire purpose of the business.
    But the problem is that using a personal account for your business funds breaks the distinction between you and the LLC which puts at risk the limited liability protection the LLC form of business provides. Doing that provides great ammunition to a creditor of the LLC to sue you personally for the debt. You also expose the funds in that account to your personal creditors, which is a disadvantage to the business and to your partner, and I would say likely violates your fiduciary obligation to the LLC and to your partner. You really ought to put that money in a LLC bank account and terminate the personal account to remedy these issues.

  5. #5

    Default Re: Use of a Personal Account Instead of a Business Account

    I just took care of it.

    I had no idea.

  6. #6
    Join Date
    Mar 2013
    Posts
    18,340

    Default Re: Use of a Personal Account Instead of a Business Account

    Quote Quoting zx7ninja
    View Post

    I had no idea.
    How long have you been in business without having any idea of how to be in business? LOL.

    I wonder how many other risks of financial ruin you are taking that you have no idea about.

  7. #7

    Default Re: Use of a Personal Account Instead of a Business Account

    Lol probably a lot. This was our first time, and we really didn't know what we were doing.

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