If you have a corporation you must protect your business the same as you would your house because if you don’t you could also lose your house. Basically, if you do anything inside your corporation that is considered personal you will lose the separation between yourself and your business. Now I am not a lawyer so I can’t tell you what all the legal ramifications of this are but recently I’ve seen some of what can happen if you don’t keep that separation locked tight. I recently came across an article by CorpNet.com which by the way is who I recommend for setting up business entities because they have your best interest at heart. To read the full article please click here

Some of the risks that stood out to me were.

  • Not properly setting up your business entity – why is this a problem – if you don’t have the correct documents and the correct setup at both the state and federal level then you don’t have a business.
  • Failure to keep business funds separate from personal funds IE using one checkbook for everything or having credit cards that are both business and personal.
  • Paying for personal purchases with a business credit card

The bottom line is to always keep your business separate from your personal. Make sure you have a separate bank account for personal expenses and never pay your personal expenses from a business account. Now that doesn’t mean you can’t pay a business expense with a personal credit card, but it does mean that you must document it and submit an expense claim to the business the same as you would expect of any employee. Owning a business is a rewarding experience; by keeping your business separate from your personal you are not only protecting that business but also yourself.