LLC: Where should the funds for initial startup costs come from?

Question

I recently created an LLC (with myself as the only member) and I have some initial costs (website, P.O. Box, etc.) that I need to finance. Can I pay for those out of my personal bank account or do I need to setup a bank account for the company, deposit personal funds into it, and then pay from the company bank account?

My understanding is that the separate company bank account helps with liability issues by showing that the company and individual are in fact separate entities.

I'm not sure if this is relevant, but the company is setup as a pass-through sole proprietorship for tax purposes. Since the profits and losses are addressed on my personal income, is there a need for a company bank account - at least in the early stages?

Answer 1

Like you said, it's important to keep your personal assets and company assets completely separate to maintain the liability protection of the LLC.

I'd recommend getting the business bank account right from the beginning. My wife formed an LLC last year (also as a pass-through sole proprietorship for tax purposes), and we were able to get a small business checking account from Savings Institute and Trust that has no fees (at least for the relatively low quantity of transactions we'll be doing). We wrote it a personal check for startup capital, and since then, the LLC has paid all of its own bills out of its checking account (with associated debit card). Getting the account opened took less than an hour of sitting at the bank.

Without knowing exactly where you are in Kentucky, I note that Googling "kentucky small business checking" and visiting a few banks' web sites provided several promising options for no-fee business checking.