So I'm in the process of selling my HVAC business and a potential buyer offered to wire the down payment directly to my personal checking account. Said it would 'save time and fees.' I declined, but now I'm second-guessing myself. Am I being paranoid? My accountant said absolutely not, but I wanted to hear from people who've actually been through this.
Business Sale
Why you should never let a buyer wire money straight to your personal account
Trust your accountant. Wiring to a personal account is a nightmare for liability. You want everything going through an escrow or at least a dedicated business account. Personal account = you're asking for commingling issues.
I did exactly fhis when I sold my landscaping company. Buyer wired $50k to my personal account. Bank froze it for two weeks because it was a large, unusual deposit. Almost missed payroll for my remaining employees. Don't do it.
Yeah, because nothing says 'legitimate business transaction' like an unexplained five-figure wire into a personal checking account. What could possibly go wrong?
SkepticalSquirrel, what exactly do you mean by commingling issues? I'm asking because I might be sellkng my bakery next year and I hadn't even thought about this.
Commingling = mixing personal and business funds. If you sell and the money hits your personal account, and then there's a Dispute, a lawyer could argue you treated the business as an extension of yourself, which weakens your liability shield. Also, tax-wise, it's a mess. Keep it in a business or escrow account.
Also, and this is the big one, a wire to your personal account doesn't come with any purchase agreement protection. If the buyer later claims they never authorized it (or it was fraudulent), you could be on the hook to return funds AND you've already handed over the business. Escrow exists for a reason.
This is exactly why I insisted on a third-party escrow when I sold my auto shop last year. Buyer grumbled about the fee but I didn't care. Worth every penny for the peace of mind.
My favorite part is the buyer saying it saves 'fees.' Wire fees are like $25. Escrow fees are a fraction of a percent. They're not trying to save you money, they're trying to save themseves a paper trail. Run.
I'm not a lawyer, but I've seen deals fall apart over this. Just do it right. Escrow or attorney trust account. It's not paranoia, it's basic adulting.
Okay, I'm convinced. Escrow it is. Thanks, everyone. And TundraBreeze42, listen to your accountant!