What commingling actually looks like, and why it matters

Using business money for personal things, or personal money for business things, without documenting either.

This is the most common reason liability protection fails, and it almost never happens deliberately. It happens one convenient transaction at a time.

What it looks like in practice

Paying a personal credit card from the business account. Buying business supplies with a personal card and never reimbursing. One account for two businesses. Moving money between entities with no record. Personal expenses run through the business because they might be deductible.

Why it's dangerous

The entity protects you because it's a separate thing. A creditor arguing otherwise looks for evidence you didn't treat it as separate — and bank statements are excellent evidence.

If the argument succeeds, the separation goes away and personal assets are exposed. That's the whole protection, undone by convenience.

Multi-entity structures are more fragile here

If you have a holding company and two operating companies but run everything from one account, you don't functionally have three entities. You have one, with extra filing fees.

What clean looks like

One bank account per entity. Business expenses from business accounts. Personal expenses from personal accounts. Owner draws taken deliberately and recorded. Money moving between entities documented by an agreement — a loan, a management fee, a lease — that actually exists and is followed.

The reimbursement fix

You'll occasionally pay for something business-related with a personal card. That's fine if you reimburse and record it. What's not fine is never doing either.

What to do

Pull three months of business bank statements and mark every personal transaction. If you find several, you have a habit rather than an accident.

Fixing it going forward is mostly free. Explaining it during litigation is not.

This is general information, not legal advice for your situation. If you want an answer for your business, book a consultation.