Results 1 to 4 of 4
  1. Collapse Details
    S Corp Online Personal Banking Question
    I have a small s-corp (4 people including myself). We wanted to open a new bank account for the s corp and we're attracted to the apy (3-4%) of some of the internet banks out there now. However the offers are for personal bank accounts. Is there anything illegal about using one of these personal checking accounts as our main bank account? We don't write an exorbitant amount of checks every month and do payroll with an outside service. Anything wrong with such a set-up?

    thank you for your time and help,

    -Edward Porter


    Share on facebook


    Reply With Quote
     

  2. Collapse Details
    Re: S Corp Online Personal Banking Question
    As long as you fully document every transaction and transfer, I would guess you would be ok. Certainly, here in the UK, I know a couple of limited companies which operate in a similar way. They use a personal account, but are carful to segregate and document everything they use it for.

    Hopefully though someone will pop along soon with a more informed and expert response.


    Share on facebook


    Reply With Quote
     

  3. Collapse Details
    Re: S Corp Online Personal Banking Question
    I would be very careful in trying to go that route. And you MUST keep very very accurate and detailed records. The reason being is that you want to avoid 'alter ego' liability.

    In essence (as you're aware), your corporation offers protection because it is recognized as an 'entity' separate from it's owners. However, there are instances where courts will allow a plaintiff to 'pierce the corporate veil' and thus imposing liability to the owners.

    The courts will refuse to recognize a corporation if the plaintiff can successfully establish that the owners abused the liability shield of the corporation. This doctrine is called the "Alter Ego" doctrine due to the fact that the owners of the corp. really treated it as if it were their own 'alter ego' as opposed to a separate entity.

    Because you formed your S-corp you should know all the requirements that you are to follow in order to remain compliant. One important factor against the corporation and one that can possibly cause a piercing of the corporate veil is for the owners to co-mingle their personal finances with that of the company's. With that said, it is VERY important that the corporation have its own separate bank account and treated (all the time) as a separate entity with it's own assets.

    I'm not sure if they helped any. Granted I'm not a lawyer by any means, and only reiterating my understading of the situation. I would recommend you ask an attorney for advice. There are "Free" legal websites that you can pose questions and attorneys will answer in reply.

    Good luck.

    EC


    Share on facebook


    Reply With Quote
     

  4. Collapse Details
    It's possible, but personal accounts aren't set up to handle large numbers of transactions and it's also important to point out that the assets in the account belong to the accountholder, not the company. So, if the accounholder decides to take money out for personal reasons, he can, without any notification or permission being granted from the company. These assets are also in jeopardy in the event the accountholder experiences a detrimental financial situation, such as tax liens, collections efforts, bankruptcy, etc. These funds will be recognized as personal assets and not company assets in these situations.


    Share on facebook


    Reply With Quote
     

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •