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Solved

SMLLC Banking Question

Forum|Forum|5 years ago
January 5, 2021
1 reply
29 views

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!

Best answer by Anonymous_

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.

Anonymous_Answer

Level 15

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.