Using dedicated business banking and credit accounts is essential for awppersonal asset protectionawp.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
You can protect your business with these two steps:
awp1. Opening a business bank account:awp
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
awpRecommended:awp BlueVine is an awponline bankawp with free business checking and no hidden fees. Great for businesses who do not often deal with cash.
awp2. Getting a business credit card:awp
- Helps you separate personal and business expenses.
- Builds your company's credit history, which can be useful to raise capital later on.
awpRecommended:awp Learn more about the best small business credit cards.
Improperly signing a document as yourself and not as a representative of the business can leave you open to personal liability. When signing legal documents on behalf of your company, you could follow this formula to avoid problems:
- Formal name of your business
- Your signature
- Your name
- Your position in the business as its authorized representative
See the image below for an example.
This ensures that you are signing on behalf of your LLC and not as yourself.
Learn more on how to protect your business & personal assets by reading our article - awp How to Maintain your LLC Corporate Veil.