paymentIn a situation where one startup is performing work for another, is it a good idea to use Venmo for the transaction? The founders would use their personal accounts and then withdraw/deposit money with the business bank account.
This seems like an easy solution for online payments that aren’t recurring. The advantages are the lack of fees and not having to meet in person or mail a check. Are there any disadvantages beyond the slight hassle transferring money between business and personal accounts? I don’t think this would be a long term solution anyway.
You should not mix personal and business accounts.
First, it makes your taxes more complicated especially if you are ever audited. In audit, the IRS will be going over your accounts with a fine toothed comb so best to keep your personal accounts out of it.
Second, you can lose the limited liability protections provided by your company. One of the benefits of having a company is that the owners’ personal assets are not in danger when the company is sued. If someone sues your company for $1 billion, then your company goes bankrupt but you get to keep your house. If you are mixing accounts, then you might lose your house too.
It looks like Venmo doesn’t yet have business accounts, so you should mail a check or use a PayPal (or some alternative) business account and just pay the processing fees.
All content is licensed under CC BY-SA 3.0.