An LLC provides you with limited liability protection for the debts of your business, but you need to treat your business as a separate entity from yourself. Some single-member LLC owners get into trouble with the commingled assets with their LLC and don't handle their financial accounts correctly. This practice can destroy your liability protection, so careful handling of your business account is essential. This includes writing and signing checks in a way that clearly indicates it is the business paying the funds.
Business Checking Account
If you plan to pay people as your LLC and not as yourself, you need a business checking account in your LLC's name. Keeping your LLC's assets separate from your own makes it clear that the LLC is a separate entity from you, not just an alter ego. If your LLC is ever sued, keeping everything separate can help protect you from personal liability.
Signing Checks
When you sign your LLC's checks, you're not signing in your individual capacity; you're signing as an agent of your LLC. You can sign your name to the check because it's clear you are the LLC's agent, but many people include the addendum "on behalf of [LLC name]." This creates an added wall of protection that makes it clear that you and the LLC are different entities.
Paying Yourself
To maintain your LLC as a separate entity from yourself, you must pay yourself from your LLC's account rather than simply depositing funds into your personal account or transferring money back and forth between accounts. This can also help you at tax time. Simply make the check out to yourself and sign it as the LLC's authorized agent. You can then deposit the check in your personal bank account.
Other Considerations
If you commingle your personal assets with your LLC's, this could serve as evidence that you and the LLC are the same entity if you're ever sued. To avoid this liability, keep careful records and keep all accounts separate. If you have a business escrow account, don't use it for any purpose other than holding funds. Don't add personal funds to the account, and don't use the money to float expenses or checks. Some professional licensing boards require that funds be placed in specific accounts or accounted for in specific ways, and professionals who ignore these requirements could lose their licenses. All businesses must account for client funds and should not use clients' funds for personal expenses, even if they immediately pay the clients back.