Business FinancesQuestion 1235 of 1605
A contractor mixing personal and business funds in one account risks:
a.A higher current ratio
b.Losing the liability protection of his corporation or LLC (piercing the corporate veil) and messy tax records
c.Automatic license renewal
d.A lower sales tax rate
Explanation
Commingling funds can let a court 'pierce the corporate veil,' exposing the owner's personal assets, and it makes tax and job-cost records unreliable. Keeping business and personal finances separate is a fundamental protection.
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Sen Lin, PrepPass Founder · Verified against California CSLB Contractor License Law & Business Exam · How we review
Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)