A lot of people ask me about commingling money of multiple LLCs.  A typical question is “We own three rental properties and have them in three LLCs. Must we keep separate checking accounts and charge cards for each LLC for bills and expenses or can we just keep them in one account? If we have to keep everything separate, wouldn’t that make a paper work nightmare requiring us to have three checking accounts, one for each LLC, and three sets of books?”

If you want to take the risk that a court might treat one or more of your LLCs as being the same or as general partners of a partnership and allowing one or more creditors access to all of the assets of the combined LLCs then don’t treat them as separate entities. If you want separate LLCs to stand as separate when challenged in court then you must keep each LLC’s revenue, expenses, books and records separate.

You have to decide which is more important to you:

  • Business simplification and the benefit of administrative cost savings, or
  • Segregation and diversification of assets and the benefit of maximum asset protection.

You can also save money if you cancel your insurance policies and cut back or eliminate maintenance, but I don’t recommend you do that. Think of the need to keep everything separate as just another cost of doing business akin to the cost of insurance.