If you own your own business and need to use funds from your business account to cover personal expenses, it's tempting to simply issue checks from the business account to cover the personal expenses, but it's not a good idea to do so. Depending on the structure of your business, using a business checking account to cover personal expenses may negate the protection the legal structure of your business offers.
If your business is a sole proprietorship, then your personal assets are not protected by its structure, meaning that if the business is sued, your personal assets can be seized to settle any court-awarded settlement. While you can use business funds to pay personal bills without any risk to the business structure or status, this practice of commingling funds is frowned upon by the Internal Revenue Service and investors, as they both prefer to see a separation of business and personal accounts. In the case of an audit, if an IRS agent discovers you're using a business account to pay personal bills, it could result in the agent declaring your accounting records unreliable, which could lead to a complete examination of every business expense claimed for tax purposes.
A partnership is similar to a sole proprietorship in that its structure doesn't offer protection for personal assets. Despite this, it's still a bad idea to use company funds for personal expenses. In addition to the potential audit issues, using partnership funds to pay personal expenses means you're utilizing your partner's share of the profit for your own expenses. Unless your partner agrees to take a proportionate share of profit equal to your bills paid, you have disproportionately shared company profits, which may cause problems with your partner and ultimately the dissolution of your partnership.
If your business is an S-corporation or a limited liability company, the structure of the business affords your personal assets protection from the liability created by the business, but when you use business funds to pay personal expenses, you run the risk of negating that protection by not treating your business as a separate entity. To maintain the protection of personal assets offered by these business structures, you can't utilize business funds to pay personal expenses.
No matter the structure of your business, the safest way for you to get funds to pay personal expenses is to withdraw the money from your business in the form of a paycheck or owner distribution. Simply prepare a check from the business account to yourself and deposit it into your personal bank account to pay your bills. Depending on the business structure and tax election, you may need to record the funds as an owner distribution in the accounting records for the business.