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  • Aug 27th, 2014 5:46 pm
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[OP]
Newbie
Aug 25, 2014
1 posts
ON

Banking with personal account?

Hi everyone, just registered here but I have been lurking for a while. I don't post much so I didn't make an account until now.

This is more for educating myself than to apply in real life but here goes:

My parents are in the process of purchasing a business and want me to help compare business bank accounts. While researching I came across this idea: can you use a personal account for business banking? And to add to that, can you use a personal credit card to pay off business bills?

Let's say we open a new personal account just for business use, and also use it to pay off credit card charges that are business related. What kind of draw backs will this have? Is this allowed?

Will this be any different if we register as a "LTD" or "INC" company?

Thanks in advance.
6 replies
Sr. Member
Jul 10, 2005
754 posts
121 upvotes
Toronto
What kind of structure will they have? sole proprietorship? partnership? corporation?
It makes a difference.

Technically, yes, you can use a personal account for a business. Eventually you may outgrow it.
Also it may complicate the work of the bookkeeper.
But as long as you keep track of the flow of $, and are able to explain all movements, it shouldn't matter much.
Sr. Member
User avatar
Feb 12, 2013
815 posts
83 upvotes
dani_toronto wrote:
Aug 26th, 2014 11:16 pm
What kind of structure will they have? sole proprietorship? partnership? corporation?
It makes a difference.

Technically, yes, you can use a personal account for a business. Eventually you may outgrow it.
Also it may complicate the work of the bookkeeper.
But as long as you keep track of the flow of $, and are able to explain all movements, it shouldn't matter much.
Yes, you can. Something else to consider.. If you're ever audited, I think using your personal bank account will be a bit troublesome.
Member
User avatar
May 19, 2006
498 posts
65 upvotes
What happens if someone pays the company by cheque with the company name on it? Might be hard to cash!
Deal Fanatic
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Jun 22, 2007
5152 posts
1068 upvotes
Brampton
How are the payments going to come ? Are they going write a cheque under business name ? if yes then can you even allowed to deposit that onto ur personal account ?
Newbie
May 28, 2013
68 posts
10 upvotes
Toronto
As stated, you can -- depending upon the type of business -- but I would ask: why?

For one, as Jesusisdanny points out, there could be consequences for so overtly mingling your business accounts with your personal accounts, but there are advantages to be had with small business accounts. For example, when I registered a business account for my sole-proprietorship with the same bank as my personal account (I needed the separate account for some business dealings abroad), my bank offered to switch my personal credit card to their small business card. Doing so dropped my interest rate by 12%. They then pro-actively offered me a line of credit that has an interest rate that was, again, much lower than any personal LoC.

It just makes sense to get a business account in most situations for so many reasons.
Deal Addict
Nov 12, 2004
1747 posts
408 upvotes
Hometown
Don't forget to price out the cost of banking at Credit Unions, some of them offer great deals. Also look into joining any trade organizations that might give you a break on certain fees especially card transactions.

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