Accounting, Payroll & Pension Issues/bank accounts
Hello Mr. Naman-
My boyfriend has a small business he started November 2013. He registered it with our state of New Hampshire, and has an EIN number, it is registered in his name. Honestly, I am the one who does all the business end work for his business, am even the one who did the work to register the company and so forth. He is a sole proprietor with no employees, no even me. Now, the problem, we use my personal checking account for everything. I know there are different opinions about using a personal account, but aside from those opinions, my concern is, my name is not attached to his business at all. And it is my personal checking account that is in only my name. All of his paychecks go into my account, we then use it for all his business expenses, along with rent and utilities, groceries and etc. I use QuickBooks to keep track of everything, and make sure to label everything correctly, whether it be business related or personal. That is not my problem, my fear is, when it comes time for taxes, will we be in trouble because everything is in my account? If he gets audited, will this effect me because it's in my account? He, for some reason, is against opening his own bank account, even a business one. He hates banks and has been stubborn about opening one ever since he started his business. At the time, I didn't even think about what this could do to my personal account, but now I am afraid it could kill it. I doubt I can open a business account in my name for his business, just because I am the office manager of sorts. So I am not sure what to do here. In my opinion, he HAS to open an account. I have looked and looked to find a way that he doesn't have to open one, but I really do not want my personal account attached to the business anymore. Nothing has happened, thankfully, but I don't want to risk it. He even tried a Green Dot card, but the fees got insane, it just didn't make sense. Do you have any suggestions or advice you can give me? Thank you very much, I truly appreciate it.
As this is more of a legal question, I really suggest you talk to an attorney.
With that said, I have the following comments.
First, you are correct you may be at risk as a bank account in your name is used for HIS business. Please stop doing that.
You should be able to setup a bank account in his name, but he will have to at least sign the paperwork. You can should be able to have signature authority of the account if he agrees, but talk to the bank about this.
As for taxes, normally for a sole proprietorship, the sole proprietor's social security number is on the account. If there is any interest income from the account in question, the IRS will look to the tax return with the account's social security number to report the income.
Also, although not required, it is good to use separate bank accounts for business income and expenses and personal income and expenses.
Again, please talk to an attorney about any personal liability you may have as your name is on the bank account.