As a small business owner, it can be challenging to manage both your business and personal finances and keep them separate.  It is best practice to only use business funds for business expenses.

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Commingling occurs when you use business funds to pay for personal expenses. Unfortunately, this can create serious tax and legal issues for you, the small business owner.  Examples of personal expenses that should never be paid with business funds are payments for personal mortgages, car loans, credit card bills as well as personal meals.

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Here are a few best practices to avoid commingling your business funds:

• Your business should have a separate checking account and credit card which is only used to pay for business expenses.
• All payments and transfers from business accounts should be documented with the business purpose.
• If you have an expense that is part business and part personal, reimburse your business for the personal portion.
• If you need funds to pay personal expenses, it is best to take a draw or distribution from your business and then use your personal account to pay for those expenses.

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