Can i take money out of my business account for personal use? I’m always surprised seeing this kind of question and majorly it comes from sole proprietors.
Having a business account is the best and a must for a corporate body, be it sole proprietorship, partnership, or corporation etc. It helps to make finances easier for you to manage in your business.
Having a business account gives a lot of good reputation to a business and it’s owner(s), and this in turn improves the image of one’s business.
However, if you’ve ever worked under a sole proprietor type of business, you’ll got to notice that the owner tends to take money out from business account for a personal use.
I’ve worked in a big pharmaceutical store and in the account section, our boss does this a number of times.
The one that really got me annoyed is when he requested that i give him a sum amount of money, which is from the business account to give him as he wants to buy a ps4 and iphone 8 plus for his son and side chick
I was really embittered but what can i do, he’s my boss and i must grant his request.
But at the end of the month, he finds it difficult to pay his worker’s, coming up with all sorts of stories when in the real sense, we do make lots of sales.
This question “can i take money out of my business account for personal use” is very rampart in the one man business and it is hundred percent wrong.
At the end of the week or month, there will lots of misappropriation and this can damage one’s business.
There’s a reason why we have a personal account and a corporate account (business account), one is for your personal use, while the other is to help the corporate bodies.
When your business has too many transactions to deal with, a corporate account is recommended. For example, here in this country, you can’t be issued a POS unless you’ve a business account.
No bank whatsoever will issue point of sale (POS) to an individual or a personal account owner, it must be a business account.
To take money out from your business account for a personal use is very wrong, and isn’t commendable at all. Some of effects of includes the followings.
Effects of taking money from a business account for personal use
Some common problems of transferring money from business account to personal account for a personal use includes;
1. Misappropriation of funds
This is one major and common problem we faced in the company i once worked for, misappropriation of funds.
When i say misappropriation of funds, it means an intentional, illegal use of the funds of another person for one’s own use or other unauthorized purpose.
Let me use use the pharmaceutical store again for an example. Our boss request for cash which only me being the accountant in the company knows of it. Other workers doesn’t know that the boss always collects money from the business account for his personal use.
And the personal use is for something that doesn’t make any bit of sense at all.
We do make lots of sales, but at the end of the month he complains that the workers didn’t put too much effort, and no cash for monthly payment.
When i check my record book, the amount that was received and the amount given to the boss for his personal use, i felt like suing my boss.
2. Loss of profits
Another bad effect of using money from business account for a personal use is loss of profits.
When it comes to business, be it sole proprietorship, partnership , corporation, limited company etc, discipline matters a lot. If you really wants to earn profit and in turn grow your business, you need to disciplined.
Being discipline here is how you manage your finances, and profits. If you’re not well disciplined, your business is bound to fail and even if you’re a good marketer.
Not being disciplined causes loss of profits, and thir in turn makes a business to fold up. This in one way relates to misappropriation of funds cause it also causes loss of profits.
Difference between personal account and business account
One major difference between a personal account and a business account is that one is for an individual, while the other is for businesses as the name states.
An individual without a business can’t open a business or corporate account cause in the course of opening your account, you’ll present all your business documents to prove that indeed you own a business.
Money transfer limit in a personal account is very much lower compared to the business account.
For example an individual or personal account is limited to N3M per transfer in a day, but a business account is usually limited to N10M per day.
You can open a personal account with no fees and referees, but same can’t be said with a corporate or business account. And there’s a minimum operating balance that should be kept in a corporate account.
Running a business account involves paying various different fees, that is not the case for personal account.
A point of sale (POS) can be issued to an individual with a business account for easy and faster payment, but it isn’t possible with an individual with a personal account.
A business account holder can act as a referee in opening or any type of account in the bank, such is not possible for an individual with a personal account.
Let me repeat this again can i take money out of my business account for personal use?
The answer to this question is yes, it is very much possible as long as you are the owner of the business. But however, this will in turn damage and cause lots of profits for you.
Not only that, your business might fold up.
Running a successful business requires you to have a good plan, marketing and be discipline well enough.
Bet i’ve answered your question “can i take money out of my business account for personal use”. So it’s up to you and what you want to do with your business.