Trivial Question? Can I move money from my small business account directly to my personal brokerage account?

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pppez80
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Trivial Question? Can I move money from my small business account directly to my personal brokerage account?

Post by pppez80 »

I am a sole proprietor of a single-member LLC that I tax as an S-Corp.
I pay myself a salary and W2 at the end of the year.
Most of my liquid assets are with TDAmeritrade.

Lets say I accumulate 100k $ on my small business account where I centralize all business related expenses and income.

Is there a problem in moving lets say $80k directly to my personal brokerage for investing assuming everything continues to be taxes as it should?

My CPA always says at the end of the day its all one money pool but would love to get a second opinion if there are any gotchas here.
dukeblue219
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Re: Trivial Question? Can I move money from my small business account directly to my personal brokerage account?

Post by dukeblue219 »

You're only beholden to yourself with a single member LLC. You can transfer profits to your personal accounts at any time, and a brokerage account is just another personal account.

Keep your books straight and don't do something obviously stupid like book the investment as a business expense. It's a draw of your earnings, nothing more to it.

I am not a lawyer but I have operated a single member LLC.
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BolderBoy
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Re: Trivial Question? Can I move money from my small business account directly to my personal brokerage account?

Post by BolderBoy »

dukeblue219 wrote: Fri May 14, 2021 8:21 pm You're only beholden to yourself with a single member LLC. You can transfer profits to your personal accounts at any time, and a brokerage account is just another personal account.

Keep your books straight and don't do something obviously stupid like book the investment as a business expense. It's a draw of your earnings, nothing more to it.

I am not a lawyer but I have operated a single member LLC.
I think this is a good answer. Particularly the sentence I bolded.
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Topic Author
pppez80
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Re: Trivial Question? Can I move money from my small business account directly to my personal brokerage account?

Post by pppez80 »

Awesome input already — thank you!
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ResearchMed
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Re: Trivial Question? Can I move money from my small business account directly to my personal brokerage account?

Post by ResearchMed »

Why are you using an LLC, given it is single member?
I'm assuming it is to reduce liability?
If so, just be careful about any appearance of commingling LLC money and your personal funds.

I do *not* know if a direct transfer like this might complicate things should there ever be any liability issues, but I'd double check. Maybe others here on BH have a better idea. Obviously one can pay oneself by check, etc. We've done that when we had an LLC. But somehow a direct transfer to a brokerage... again, i'd just double check.
If the LLC is not for liability protection, then this wouldn't be a concern, obviously.

RM
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Hayden
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Re: Trivial Question? Can I move money from my small business account directly to my personal brokerage account?

Post by Hayden »

You are allowed to take a distribution from your S Corp.
The amount of the distribution is another matter. Much has been written on that subject. Things to keep in mind are your basis, and the size of your salary.
Your CPA can advise you on the amount of the distribution.

In terms of the mechanics of taking an S Corp distribution, you would transfer the money from the business account to your personal account.

I always wrote up meeting minutes to document the S Corp distribution.
bradinsky
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Re: Trivial Question? Can I move money from my small business account directly to my personal brokerage account?

Post by bradinsky »

OP,
If you're not trying to take the money as income & you are interested in investing the excess cash from the business, why not just open a second brokerage account to accommodate business funds exclusively? You could make the AA mirror your personal account & achieve the same results. That way there would be no commingling with personal funds & you would have a paper trail if you were ever audited. Funds could easily be moved back to the business, if needed.
pkcrafter
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Re: Trivial Question? Can I move money from my small business account directly to my personal brokerage account?

Post by pkcrafter »

Do you have a SEP IRA or some other tax-deferred savings account that you contribute to?

Paul
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Lee_WSP
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Re: Trivial Question? Can I move money from my small business account directly to my personal brokerage account?

Post by Lee_WSP »

As mentioned it's just a draw on earnings and you'd be taxed on it at the end of the year. Even if earnings goes negative at the end of the year, you can't steal from yourself. If will all be reconciled at the end.

However, your bookkeeper would appreciate it if you transferred to personal checking first.
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pppez80
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Re: Trivial Question? Can I move money from my small business account directly to my personal brokerage account?

Post by pppez80 »

pkcrafter wrote: Sat May 15, 2021 9:55 am Do you have a SEP IRA or some other tax-deferred savings account that you contribute to?

Paul
I do and I max that out every year; this inquiry is really around being able to not have excess cash sit around during the year.
Topic Author
pppez80
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Re: Trivial Question? Can I move money from my small business account directly to my personal brokerage account?

Post by pppez80 »

Lee_WSP wrote: Sat May 15, 2021 9:57 am As mentioned it's just a draw on earnings and you'd be taxed on it at the end of the year. Even if earnings goes negative at the end of the year, you can't steal from yourself. If will all be reconciled at the end.

However, your bookkeeper would appreciate it if you transferred to personal checking first.
That makes sense — thank you.
Topic Author
pppez80
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Re: Trivial Question? Can I move money from my small business account directly to my personal brokerage account?

Post by pppez80 »

bradinsky wrote: Sat May 15, 2021 9:28 am OP,
If you're not trying to take the money as income & you are interested in investing the excess cash from the business, why not just open a second brokerage account to accommodate business funds exclusively? You could make the AA mirror your personal account & achieve the same results. That way there would be no commingling with personal funds & you would have a paper trail if you were ever audited. Funds could easily be moved back to the business, if needed.
Definitely worth considering — ideally would keep my account footprint lean though.
Topic Author
pppez80
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Joined: Mon May 27, 2019 12:19 pm

Re: Trivial Question? Can I move money from my small business account directly to my personal brokerage account?

Post by pppez80 »

ResearchMed wrote: Fri May 14, 2021 9:17 pm Why are you using an LLC, given it is single member?
I'm assuming it is to reduce liability?
If so, just be careful about any appearance of commingling LLC money and your personal funds.

I do *not* know if a direct transfer like this might complicate things should there ever be any liability issues, but I'd double check. Maybe others here on BH have a better idea. Obviously one can pay oneself by check, etc. We've done that when we had an LLC. But somehow a direct transfer to a brokerage... again, i'd just double check.
If the LLC is not for liability protection, then this wouldn't be a concern, obviously.

RM
Yes, confirming its for liability.
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