So when I started my LLC last year I was in a rush and just kept using my personal checking account for everything. It's a single-member LLC, I'm the only one, and at the time I figured 'it's all my money anyway.' Now I'm trying to get a business credit card and the bank asked for business bank statements. I handed over my personal ones and the guy just kind of paused. I'm worried I've messed things up permanently. Can I fix this by just opening a business account now and moving forward? Or do I need to do something about the past year?
LLC Banking
I used my personal bank account for my LLC and now regret it
You're not permanently doomed, but yes, open the business account today. The past is the past, but the commingling is what worries lenders more than anything.
Honest question, does the bank actually care or was the guy just confused because he's used to seeing statements with the LLC name on them?
@wrenandwillow yeah that's what I'm afraid of. Is there any way to untangle the last 12 months or is that just going to look like like fraud if I try?
Not fraud unless you're hiding something. People commingle all the time by accident. Just start clean, don't try to retroactively reclassify a year of personal transactions — that's where people get themselves in trouble.
Also depending on your state and how the LLC was set up, piercing the veil only really becomes a problem if you get sued. Are you getting sued? Because if not, breathe.
lol the banker pause is such a universal experience. They do that for everything though. Mine paused when I said I was a sole proprietor.
To be clear, I'm not a laywer or accountant. But the practical move is: open the account, move all future business income and expenses through it, get a business card and stop using the personal one for anything LLC-related. The past year isn't going to vanish but you can build a clean record going forward.
this. Also keep a simple ledger of what was business vs personal from last year if you can reconstruct it. Doesn't have to be perfect. Just something you could show if asked.
Appreciate all of this. I think the panic was mostly the banker's face. I'll open the account this week, and start keeping better records. Reconstruction is going to be a nightmare but I have the statements at least.
Reconstruction is annoying but honestly not that hard if it's one year and one account.Just go line by line and tag things. Put on a podcast.
One more thing, and I say this as someone who learned it the hard way: don't mix the accounts again even once. The first time you pay a personal bill from the business account 'just this once' is how it starts over.
Genuinely curious though, did the bank actually deny you the card or did they just ask for more paperwork? Because those are very different outcomes.
They didn't deny it, they just asked me to come back with with business account statements. So I guess not a disaster, just a detour. Which honestly is a relief. Thanks for talking me off the ledge everyone.
For what it's worth, I did the exact same thing my first year and I'm still standing. Good luck with the the account.