What is it called when you mix business and personal money?
It’s called commingling, or commingling funds. The term describes any situation where business and personal money flow through the same accounts or get treated interchangeably.
Common examples include paying for business supplies with a personal debit card, depositing customer payments into your personal checking account, using one credit card for both business meals and family groceries, or pulling money from the business account to cover personal bills without recording it as an owner draw.
Commingling creates three distinct problems. The first is legal. If you operate as an LLC or corporation, the entire point of that structure is to separate your personal assets from business liabilities. When you treat the business bank account like your personal piggy bank, a court can do the same thing. This is called piercing the corporate veil, and it means creditors can come after your personal assets to satisfy business debts. The legal protection you thought you had disappears.
The second problem is taxes. When business and personal transactions run through the same accounts, identifying legitimate business deductions becomes guesswork. You end up either missing deductions because you can’t prove they were business expenses, or claiming personal expenses as business deductions because you can’t remember which was which. Neither outcome is good.
The third problem is that your books become unreliable. A bookkeeping service can’t produce accurate financial reports when half the transactions are personal spending mixed in with business activity. Every statement requires investigation to figure out what actually belongs to the business.
The fix starts with separate accounts. Get a dedicated business checking account and a business credit card. Run all business transactions through those accounts and only those accounts. When you need money from the business, take a documented owner draw rather than just swiping the business card at the grocery store.
If you’ve already been commingling for months or years, your books will need bookkeeping cleanup before they’re useful. Someone has to go through every transaction and separate business from personal. The longer you wait, the harder that process becomes because nobody remembers what a transaction was for six months after it happened.
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