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  1. #1
    Join Date
    Sep 2016
    Posts
    24

    Default Mixed Personal/Business Assests in LLC Bank Account

    My question involves business law in the state of: Arizona


    I've continuously (and stupidly) have mixed personal/business funds in my LLC bank account over the past year and i'm sure it would be more than enough to "Pierce the corporate veil" in the event I was sued.

    I've made personal purchases (small to large) and paid personal bills over the course of the past year. How do i go about reversing this? I'm not talking about 1 or 2 transactions, but multiple (100+).

    Am I better off creating a new LLC for my business and a new bank account and restarting?

    I understand I've been foolish but want to get back on the right track. Please give me some advice.

  2. #2
    Join Date
    Oct 2006
    Posts
    15,112

    Default Re: Mixed Personal/Business Assests in LLC Bank Account

    Quote Quoting Crext
    View Post
    My question involves business law in the state of: Arizona


    I've continuously (and stupidly) have mixed personal/business funds in my LLC bank account over the past year and i'm sure it would be more than enough to "Pierce the corporate veil" in the event I was sued.

    I've made personal purchases (small to large) and paid personal bills over the course of the past year. How do i go about reversing this? I'm not talking about 1 or 2 transactions, but multiple (100+).

    Am I better off creating a new LLC for my business and a new bank account and restarting?

    I understand I've been foolish but want to get back on the right track. Please give me some advice.
    Just stop doing it, period. As more time passes the opportunity to pierce the corporate veil eases. In the meantime, buy yourself some good business liability insurance and protect yourself that way for the time being.

  3. #3
    Join Date
    Mar 2013
    Posts
    16,670

    Default Re: Mixed Personal/Business Assests in LLC Bank Account

    It's a simple fix.

    From now on stop doing it. If you want any money from your LLC bank account, write yourself a check and deposit it into your personal checking account.

    If you use credit cards, get a business credit card for the LLC and use it for business purchases. Use personal credit cards for personal purchases.

    And, yes, get the proper business liability insurance because that kind of claim will have your name on it as an individual because you are the face of your company and your negligence goes back to you personally.

  4. #4
    Join Date
    Sep 2016
    Posts
    24

    Default Re: Mixed Personal/Business Assests in LLC Bank Account

    Quick question,

    Could personal creditors sue pierce my corporate veil as well? Example, if I were to be sued personally by a personal creditor/another person.

  5. #5
    Join Date
    Sep 2010
    Posts
    18,827

    Default Re: Mixed Personal/Business Assests in LLC Bank Account

    Quote Quoting Crext
    View Post
    Quick question,
    Could personal creditors sue pierce my corporate veil as well? Example, if I were to be sued personally by a personal creditor/another person.
    They don't have to pierce things. Your membership of the LLC is an asset that can be attached to satisfy the judgment.

  6. #6
    Join Date
    Mar 2013
    Posts
    16,670

    Default Re: Mixed Personal/Business Assests in LLC Bank Account

    Quote Quoting Crext
    View Post
    Quick question,

    Could personal creditors sue pierce my corporate veil as well? Example, if I were to be sued personally by a personal creditor/another person.
    In the abstract, sure.

    What business are you in and what are you concerned about?

    Hypotheticals are never helpful.

  7. #7
    Join Date
    Oct 2006
    Posts
    15,112

    Default Re: Mixed Personal/Business Assests in LLC Bank Account

    Quote Quoting flyingron
    View Post
    They don't have to pierce things. Your membership of the LLC is an asset that can be attached to satisfy the judgment.
    That is not entirely correct. Since a membership in a LLC works a little differently than shares in a corporation its the income stream from the LLC that can be attached, rather than the membership itself.

  8. #8
    Join Date
    Sep 2016
    Posts
    24

    Default Re: Mixed Personal/Business Assests in LLC Bank Account

    I own a building maintenance company.

    Lets say for instance, I were to default on a personal loan, or be sued personally by someone.

    Since my LLC funds has now been mixed with personal funds/expenditures. Could they sell my company or sue my LLC?

    To add: it is a single member LLC.

  9. #9
    Join Date
    Mar 2013
    Posts
    16,670

    Default Re: Mixed Personal/Business Assests in LLC Bank Account

    An LLC is an asset. Income from an asset can be attached.

    Make sure you don't do anything that'll get you sued.

  10. #10
    Join Date
    Oct 2014
    Posts
    7,088

    Default Re: Mixed Personal/Business Assests in LLC Bank Account

    Quote Quoting Crext
    View Post
    I own a building maintenance company.

    Lets say for instance, I were to default on a personal loan, or be sued personally by someone.

    Since my LLC funds has now been mixed with personal funds/expenditures. Could they sell my company or sue my LLC?

    To add: it is a single member LLC.
    Your personal creditor would not sue your LLC, but it could potentially reach the assets or income of the LLC to pay your debts since the LLC is an asset of yours. This would be true even if you had not commingled the personal and business funds. The advantage of the LLC, when you run it correctly, is that the creditors of your LLC cannot come after you personally for the debts of the LLC just because you own the LLC. Even then, you are still liable for your own acts of negligence, even when you are doing work for the LLC, so you certainly want to have sufficient insurance to cover that.

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