A need for legal protection came with the creation of corporate entities around the globe. No longer was it enough to simply have a business with a different name than yourself. Government agencies began incessant hounding on business owners to report their transactions created. Furthermore, it is now considered highly risky to be commingling funds between companies!
To understand how commingling works, we’re going to detail the legality and practicality of it. If you’ve been wondering about this term or money handling method, then you’ve come to the right place!
Let’s get right into this.
What is Commingling Funds Between Companies? Is It Legal?
Commingling, by definition, means to mix or blend things. In legal terminology it refers to a fiduciary (often a business owner) committing a breach of trust. In essence, it is the act of someone handling their business finances incorrectly. That isn’t to say that they lose ownership of the funds, but that 3rd party agencies encounter trouble identifying who actually owns the funds.
When a business owner commingles funds between themself and the business, they withdraw funds without proper legal documentation. There is a proper way to withdraw or submit money in business. The process is similar to how a customer would purchase an item or service.
A company commingling funds is basically withdrawing those funds without legal differentiation. If this activity is seen, it can be used against the business owner should they be sued in a court of law.
If a commingling occurs, this creates the possibility for others to “pierce the corporate veil”, allowing the owner’s personal assets to be attacked. Thus, it is critical that business owners properly issue funds to its owners & operators to maintain that legal separation.
Should the business get sued, maintaining the corporate veil protects the individuals from losing what they own. So while commingling isn’t illegal, it is still a truly risky way to handle your business funds.
Commingling funds between companies doesn’t protect the individual much either.
Am I Protected If I Commingle Funds To Another Company?
Remember that association is the preface to legal trouble. When the operator or owner of the business is commingling funds, it means they are doing it without legal distinction. There is no proof that the company is separate from the owner if they are commingling funds. The same goes for a company transferring funds to another company only to withdraw those funds for personal use. Ultimately, there is still legal danger with this method.
If the company is sued, the other company that received the commingled funds will not be legally abjugated. The money is going somewhere, and simply transferring money doesn’t negate financial responsibility. If a party is owed everything a company has, the suing party will go after everything they can. Without proper legal structure and proof that the business is separate from the owner, they can pursue everything you own.
Furthermore, with how simple it can be to properly maintain the corporate veil, there is little reason to commingle and take on the risk.
Get Legal Advice & Apply Simple Steps
To properly separate your personal belongings from a company’s, specific paperwork must be filed. It is imperative that you take every measure to distance yourself from the potential liability of your company being sued.
There are particular ways to do this, and you should consult an attorney to properly set these measures up:
- Assign yourself a salary issued by your company. This lists your name on the company as an employee or operator, and separates your personal assets from the company’s.
- Outline the terms and policies of your company. An attorney can write up specific documentation that can and should be used in a court of law as needed.
- If you are the owner of a company, you should be sure to have the company listed as a separate legal entity. Recall that every person counts as a legal entity. It isn’t enough to just call the business something besides your name.
Remember that this article isn’t legal advice, you should consult a professional attorney or legal company to properly setup these personal protections.
Ways To Mitigate Risk
Many companies are becoming creative in outsourcing their workforce. The US government is paying millions of people to stay home and play video games. This is because of unemployment checks which offer better pay that entry-level jobs. Companies are now hiring foreign employees instead of domestic ones.
Business doesn’t change, it simply takes different forms. It is always the same at its core. Supply and demand.
Good business today isn’t about walking around the law. Profitable business is about using the law to your advantage. That’s why proper legal structure is essential to a safe and secure company.
Are There Ways To Capitalize On This Market?
Yes! Because so many companies are unnecessarily risking their personal assets, many individuals have stepped forward to educate them. But this opportunity to educate companies has also led to greater opportunities for profit. In fact, here at Business Lending Blueprint, we teach our students how to build 6 figure online businesses from home.
The course we teach educates students how to build “recession-proof” businesses, and covers necessary legal fundamentals. We aren’t interested in helping people build something that isn’t going to last. (Like the millions of companies that permanently closed in 2020)
All of those company failures could have been prevented, and many of those employees could still have remained employed if they had properly secured themselves for economic problems.
Conclusion
If you would like to learn how to build a healthy and profitable business, then click the button below right now!
If we haven’t met, my name is Oz and I am the creator of the Business Lending Blueprint. I’ve developed a free 70 minute training video that you can watch for free below. The button will take you there.
You will learn the following from the video:
- How this business model makes profit.
- How to secure your new business for any geopolitical and economic hurdle.
- The ways of a profitable middleman and how to become in-demand in every market!
- And so much more.
Remember, this is a free training, and we’re offering a system that no one else can come close to.
See you on the other side!
Regard,
Oz
