SMLLC Banking Question

[Ac711]

Hello,

I just recently opened a SMLLC for my motorcycle racing team.  One of my sponsors is providing me with a cash sponsorship this season.  They sent me a wire transfer to my personal bank account.  I plan to open a business bank account this week for the LLC but I needed to pay an invoice this week for expenses related to the race season, so I paid that invoice out of my personal bank account using the sponsor funds.

Will this be an issue that I already spent some of the funds before opening and depositing into the business account?

Thanks in advance!

[Anonymous_ · Accepted solution]

It is always optimum to separate business and personal funds and never comingle the two.

Regardless, a single-member LLC (without an election to be treated as a corporation) is a disregarded entity for federal income tax purposes. In short, a SMLLC is effectively a sole proprietorship that files a Schedule C.

As a result, the fact that you spent the funds on certain expenses out of your personal account is not an issue.