Can I Take Money Out of My Business Account for Personal Use?

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Entrepreneurs operate in a world of risk. Even the most successful business owners can run into unforeseen financial struggles—the COVID-19 pandemic being a stark example. If your business takes a turn for the worst, it’s possible that the losses will impact your personal finances. When worry for you and your family’s well-being creeps in, you might consider taking money out of your business account for your personal use.

Downturns aren’t the only times when it can be tempting to scoot business income over to your personal bank account. Maybe you want to make a major purchase, such as a car, or take your spouse on the island vacation you have earned. Whatever the case may be, there is a reason you’re questioning whether you can or should take money out of your business account.

The Short Answer

It’s usually not a good idea to mix business and personal funds. A business account is designed to separate the two so you can maintain proper recordkeeping, streamline operations, and simplify your accounting.

Should I Transfer Money from My Business Account to Cover Personal Expenses?

Again, it’s not recommended for you to use business funds toward personal expenses. Doing so will expose you to the following risks:

  • Sole proprietors – If you are audited and your business accounting records appear to include personal purchases, your business expenses may be subject to further scrutiny and additional tax.
  • LLCs and S-Corps – If your funds are commingled, it may be more difficult to prove that your business is a separate entity. 
  • Partnerships – Pulling money from your business account could affect partner shares of profits. 
  • Any business with multiple owners – Money taken out of the business affects your company’s co-owners and could lead to ruffled relationships.
  • Any business with employees – Draining your business account could compromise your cash flow and make it more difficult to pay your staff.

Across the board, the best practice is to keep your business and personal funds separate.

Ways to Pull Money from Your Small Business

Another reason to avoid commingling is that there are documented, accounting-friendly ways to access your business funds for personal use. Here are a few options:

  • Pay yourself a salary. It’s the tried and true method for a business owner to be paid regularly, as an employee of his or her own company, in the form of paychecks or distributions in set amounts.
  • Take an owner’s draw. This is different from a salary in that you can decide when and how much to pay yourself, with variation from one draw to the next. But don’t mistake the draw as a ploy for paying personal expenses; it’s better when used as a flexible method for paying yourself in line with your business’ performance.
  • Give yourself a year-end bonus. There’s nothing wrong with wanting to be rewarded for the time and energy you put into growing a successful business, especially at the end of the year when holiday shopping takes place. After a salary or draw, you can calculate your company’s profits to determine an appropriate end-of-year bonus.
  • Pay yourself through dividends. Note that these can be a little more complicated to calculate than cash bonuses, as they are on a per share basis.
  • Build your company’s benefits program. A comprehensive benefits package for you and your employees can mitigate many personal expenses by offering health insurance, life insurance, fitness memberships, transportation reimbursements, and other cost-saving benefits from the company.

Paying yourself through any of the above involves many tax considerations for both you and your business. It’s best to consult an accountant who can advise you on the various tax strategies available to business owners. Also keep in mind that deciding how much to pay yourself is an important conversation on its own. 

 The Common Struggle for Sole Proprietors

When you’re first starting your business—or if you’re building a solopreneur-style business as a freelancer—it’s easy to settle for sole proprietorship in lieu of establishing a business entity. However, being a sole proprietor makes it easy to commingle. If both your business and personal expenses are being paid through the same bank account, it will inevitably become difficult for you to track your business income and report your business expenses for taxes. To draw the divide between your business and personal finances early on, consider opening a business bank account

Tools to Transfer Money to and From Your Business Account 

You’ve read through the right ways to access business funds for your personal use and recognized the risks of commingling. Now, you’ll want to make sure your business bank account is equipped for you to move money with ease. With many online banks, you generally have several money transfer options, including:

  • Instant Transfers – Link different debit cards to transfer money within seconds using your phone, tablet, laptop, or desktop computer. 
  • Mobile Check Deposits – Get money into your business account sooner by skipping trips to the bank and instead using your mobile device to deposit checks digitally.
  • ACH Transfers – Make secure, fast, electronic money transfers using the recipients’ account information.
  • Wire Transfers – Make secure, electronic, bank-to-bank transfers within the U.S. or internationally.

It’s not easy balancing your personal and business finances. A business bank account is a great place to start and can help you stay the course with growing your business the right way while taking home a steady paycheck for yourself. 


Hi there! This post exists to offer you (hopefully) useful information but it cannot take the place of personalized professional advice. Please consult a qualified expert if you have questions about your business. Also, Azlo doesn’t endorse any third-party sites that are linked here.

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