Are you a member or owner of an LLC? Whether you're the sole member or a member along with other people in an LLC that is having some cash-flow problems, you're not alone. In this blog, I advise you about the proper way to get cash into your business. I'm Katherine Taylor, the lawyer for business owners, and I represent a lot of LLC owners. We have many people come to us asking, "How do we get cash into our business?"

The first thing to understand is that the LLC is a separate legal person. The owner or member of the LLC really can't simply pay the bills of the LLC from their personal account. So, in order to give the LLC the funds it needs to pay its own bills, the owner or owners can put cash into the LLC in one of two ways.

First, the owners can make a capital contribution to the LLC. A capital contribution is what it's called on the books and records of the company. For the owner, this may simply mean writing a check to the LLC or transferring funds to the LLC. The accountant will then record that transaction on the company's books as a capital contribution.

The second option is for the owner to make a loan to the LLC. In that case, the transaction should be recorded as a loan on the company's books and records. Those are really the two ways an owner should be putting money into an LLC: either as a capital contribution or as a loan.

It's important that, when this is done, there be a separate check or transfer of funds from the owner to the LLC. The LLC should then use those funds to pay its own bills or for other business purposes. The owner shouldn't simply write checks directly from a personal account to pay the LLC's bills. That's essentially called commingling, and it can create problems and potentially put at risk the limited liability protection you have in place when you form an LLC in the first place.

This can get very complicated, and we advise a lot of clients through these types of situations. If you have questions about how to properly put money into your LLC, you can always give us a call.