Can I Put Utilities in My Business Name?

Establishing utility services under a business’s legal name is a standard and permissible practice for formally structured companies. This approach is fundamental to maintaining a clear separation between business and personal finances. For entrepreneurs operating as corporations or limited liability companies (LLCs), placing utilities in the business’s name is a key step in solidifying the company’s distinct financial identity.

Financial and Legal Implications

Placing utility accounts in your business’s name offers significant financial and legal advantages. One of the most direct benefits relates to tax deductions. When a utility bill for services like electricity, gas, water, or internet is in the business’s name, it simplifies the process of claiming these costs as business expenses. The Internal Revenue Service (IRS) allows deductions for expenses that are both “ordinary and necessary” for conducting business, and having bills addressed to the company provides clear documentation for commercial use.

This separation is also important for liability protection, particularly for owners of LLCs and corporations. These business structures create a legal distinction between the owner and the company, often referred to as the “corporate veil,” which shields personal assets from business debts. This protection can be jeopardized if business and personal finances are mixed, a concept known as “commingling funds.” Paying for business utilities from a personal account can be viewed as commingling, potentially allowing creditors to “pierce the corporate veil” and pursue the owner’s personal assets.

Establishing utility accounts under the business name can also help build business credit. Utility and telecom suppliers sometimes report payment histories to business credit bureaus like Dun & Bradstreet, Experian, and Equifax. This reporting is not universal, and you should not assume it is being done automatically. A consistent record of on-time utility payments can help establish a business’s credit profile, which is distinct from your personal credit and can be beneficial when seeking business loans.

Required Information and Documentation

Before contacting a utility provider, gathering the necessary information will streamline the process. Utility companies require specific details to verify the business’s identity and legal standing. You will need to provide:

• The full legal name of your business as registered
• The physical service address where the utilities will be provided
• Your Employer Identification Number (EIN), the unique number assigned by the IRS to identify a business entity for tax purposes
• Your business formation documents, such as the Articles of Incorporation or Articles of Organization
• The name and title of the individual authorized to open accounts on behalf of the business

Finally, be prepared for a security deposit. Utility companies often require a deposit for new commercial accounts to mitigate the risk of non-payment, especially for businesses without an established credit history. The deposit amount can vary based on the provider and anticipated consumption. The deposit may be waived if the business has a strong credit history.

The Process for Setting Up a Business Utility Account

Once you have your documents, initiate the application process with local utility providers. You will need to contact each provider for electricity, gas, water, and internet separately and specify that you are opening a “commercial” account. This distinction is important as it determines the rate structure and terms of service.

Many larger utility companies have online portals for business customers, but you may also need to complete the process over the phone or in person. After submitting your application, the provider will inform you of the required security deposit, which must be paid before service can be activated. Upon payment, you will receive your new account details and can schedule the official start date for your utility services.

Utilities for a Home-Based Business

The rules for utilities differ for a home-based business. Utility providers and local zoning ordinances generally do not permit a residential property’s utility accounts to be transferred into a business name. Doing so could violate your provider’s terms of service, as residential properties are billed under different rates and regulations than commercial ones.

For tax purposes, the correct approach is the home office deduction. The IRS allows you to deduct the business portion of your household utility bills. This requires calculating the percentage of your home used “regularly and exclusively” for business. For instance, if your home office occupies 10% of your home’s total square footage, you can deduct 10% of your utility bills as a business expense.

An exception applies to telecommunication services. It is permissible to have a second, dedicated business phone or internet line installed at a residence. The account for that specific line can and should be in the business’s name, making the entire cost fully deductible as a business expense without needing a square footage calculation.