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Business Transactions Via Personal Accounts

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Question: 
I was told by our auditor that personal accounts can’t be used to conduct business transactions and if it happens, a SAR should be filed. Is this correct?
Answer: 

There is nothing automatically illegal about processing business transactions through personal accounts, particularly if the business is a sole proprietorship. In cases of a sole proprietorship, the business owner may not have established a separate business account and that is totally legal. It is often a lot easier to do business bookkeeping and taxes (which ultimately show up on the individual's return) when there is a separate account. The bank may even require that a separate account be established according to its own policies. If the business in question is not a sole proprietorship, its transactions should not be going through a personal account and if your bank detects such transactions it may consider them suspicious for a number of reasons. You may suspect that funds are being converted to personal use illegally and it is also possible that there is an attempt to hide business income from the IRS.

First published on BankersOnline.com 1/26/09

First published on 01/26/2009

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