Open a Business Bank Account

One thing that will help you more than anything else as a business owner is to build a 100’ high wall between your personal finances and your business finances. If you don’t keep them separate, then immediately following the first sale from your business, you begin to loose track of cost, taxes, and profit. Why do you care? You may not, however, our friends at various levels of the government make it their business to care and expect you to do the same.

Most people don’t like to setup business bank accounts because they cost money. My Personal Checking Account is free. Business checking accounts generally get hit with all sorts of fees. You shouldn’t, however, let this detour you from doing the right thing from a business standpoint. If (God forbid) 6 years into your business the IRS decided to audit you because your sales shot up from $20,000 annually to $200,000 annually, I guarantee you that you will not want to be trying to sort out your personal expenses from your business expenses from within a single personal checking account. 

If you try to setup a separate personal checking account and use it for business, an alert bank will quickly notice and will likely convert you over to a business account.

Before you can setup a Business Checking Account, you will need to have your business registered in your State (for purposes of sales tax). Be sure to bring the registration papers with you when you go to the bank to setup the account. 

Living in a small town may limit the number of banks you have to choose from. You still should review the available choices and terms. If you determine that the costs from your local banks are too excessive, you may want to consider one of the many Internet Business Banking Services. They are very competitive and generally offer a few hundred transactions before invoking a fee.

No matter which route you choose, there are a few things you should consider when opening a Business Banking Account:

Things to Consider

• How many free transactions per month are provided?
• What is the cost of additional transactions?
• Are there minimum balance requirements?
• Will a balance over the minimum offset additional transactions?
• Is there a basic monthly fee?
• Is there a cost for Business Checks?
• How many free Business Checks can you receive per month?
• Is there a 24/7 helpline available?
• Does the bank offer a line of credit through Visa or MasterCard on your Business Account?
• Are there annual fees on the line of credit?
• What are the interest rates on the line of credit?
• Are there special terms and conditions on the line of credit?
• Is there a holding period for deposits made to your account?
• What types of monthly statements are available?
• In the unlikely event of an audit, what are the costs of making my records available for review?
• If using an online bank, do their rates of interest compare favorably with local banks’ interest checking?
• If using an online bank, are you required to make all deposits via the US Postal Service or can you use local outlets for deposits and withdrawals?
• What are the ATM usage (local and competing bank) costs?

You’ll also want to tie you business account to your PayPal account so that you can be classified as a Verified PayPal member and have your receipts transferred directly into your bank account.