Author Topic: Business checking account  (Read 5843 times)

kristof

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Business checking account
« on: January 08, 2016, 02:40:06 PM »
Does anyone have any recommendations for a simple checking account for a 1-person business? My wants are pretty simple - free, and providing online banking and remote check deposit from a non-mobile device (i.e. laptop or desktop).

I've read mixed reviews about smallbusinessbank.com so I'm hesitant to go with them, and not too many of my local credit unions (I'm in the Boston area) provide business accounts. Most of the big banks seem to charge even for the simplest accounts or have complicated minimum deposit/direct deposit requirements.

johnny847

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Re: Business checking account
« Reply #1 on: January 08, 2016, 03:20:09 PM »
So I'm no lawyer or accountant, but I don't think there's anything wrong with using a "personal" checking account for business expenses. Since you're a one person business, all you really need beyond free, online banking, and online deposit from a non mobile device is the separation of business expenses from personal expenses right?

Business checking accounts do allow you to pay employees via direct deposit and stuff like that, but you don't need that as a one person business.

protostache

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Re: Business checking account
« Reply #2 on: January 08, 2016, 04:29:13 PM »
So I'm no lawyer or accountant, but I don't think there's anything wrong with using a "personal" checking account for business expenses. Since you're a one person business, all you really need beyond free, online banking, and online deposit from a non mobile device is the separation of business expenses from personal expenses right?

Unfortunately this is not the case. Banking regulations say you can't use an account tagged as a "personal" account for business purposes. If the bank figures out what's going on they'll freeze and/or close the account.

I initially went with SBB and then after using their online interface quickly transitioned to EverBank Small Business Checking. They want $1,500 to open the account but there aren't any fees for basic services. I have the Business Checking because I have an LLC. They charge a fee if you have less than $5,000 in there, but that fits my needs pretty well.

Come to think of it I don't know if they do remote check deposit from non-mobile devices. I haven't needed it so I haven't looked.

If EverBank doesn't work, I think I would walk into a brick and mortar bank (anybody but Bank of America) and chat with a banker for a bit. They might be able to work with you. Maybe try smaller non-chain banks.

johnny847

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Re: Business checking account
« Reply #3 on: January 08, 2016, 05:04:38 PM »
So I'm no lawyer or accountant, but I don't think there's anything wrong with using a "personal" checking account for business expenses. Since you're a one person business, all you really need beyond free, online banking, and online deposit from a non mobile device is the separation of business expenses from personal expenses right?

Doing some quick searching, I have found articles that say the contrary.

http://smallbusiness.chron.com/difference-between-small-business-account-regular-checking-account-3855.html
Quote
A business owner is not always required to establish a business checking account. For example, a sole proprietorship owner can choose to use his own individual checking account to conduct business—he has to ask customers to pay him in his own name. This isn't always the best strategy, however, because it's difficult to separate business from personal activities when you use the same account.

http://junewalkeronline.com/recordkeeping/you-do-not-need-a-business-checking-account/
Quote
As long as your records are accurate one checking account is perfectly acceptable to the IRS. I think one big factor in the insistence on a business checking account is that itís supposed to cover financial shenanigans. Many people like to believe that because something is paid by a business check that makes it a business deduction. Of course, that is not so!


However, these are by no means definitive. They are definitely not citing any laws or IRS publications (not that IRS publications are laws - they're merely the IRS's opinions of them).

And you claim banking regulations. This is not the same thing as a law. If in fact those banking regulations do exist, then sure, they can shut your account. But that's very different from it being illegal.

ETA: Here's another one.
http://www.theguardian.com/money/2005/oct/13/finance
Quote
There is no legal requirement to have a business bank account if you are a sole trader or partnership. It is only necessary for a limited company. However it is quite useful to keep your personal and trading accounts separate especially for completing your tax returns and claiming expenses that can be offset against the profits made to reduce your tax bill.

There are also plenty of articles that say businesses should have a separate account for the ease of keep track of business transactions. But I haven't seen one say that it islegally required for sole proprietorships.
« Last Edit: January 08, 2016, 06:15:05 PM by johnny847 »

ShortInSeattle

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Re: Business checking account
« Reply #4 on: January 08, 2016, 05:17:15 PM »
I have had small business checking accounts with Chase for ten years - I began with WAMU before they were acquired. Chase is fine when it comes to being a bank although I'm thinking about switching to an account with my local credit union. (BECU)

I don't go to the bank in person very often but Chase has a knack for making me feel unwelcome when I do. YOU CAN DO THIS ONLINE YOU KNOW... is the common refrain, with a slight tone of exasperation.

Consider things like:
- The volume of transactions you'll have
- Do you need to do in-person deposits?
- Do you want a big bank that can offer you credit lines and other services?
- What are their fees?
- Do you need access to ATMs? Do they have ATMs near you? Do you travel? Do you need a bank with branches everywhere? What are their hours?
- Does their online banking system interface with the software you'll use for accounting?

SIS


Paul der Krake

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Re: Business checking account
« Reply #5 on: January 08, 2016, 06:11:21 PM »

protostache

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Re: Business checking account
« Reply #6 on: January 08, 2016, 06:28:04 PM »
So I'm no lawyer or accountant, but I don't think there's anything wrong with using a "personal" checking account for business expenses. Since you're a one person business, all you really need beyond free, online banking, and online deposit from a non mobile device is the separation of business expenses from personal expenses right?

Doing some quick searching, I have found articles that say the contrary.

http://smallbusiness.chron.com/difference-between-small-business-account-regular-checking-account-3855.html
Quote
A business owner is not always required to establish a business checking account. For example, a sole proprietorship owner can choose to use his own individual checking account to conduct business—he has to ask customers to pay him in his own name. This isn't always the best strategy, however, because it's difficult to separate business from personal activities when you use the same account.

http://junewalkeronline.com/recordkeeping/you-do-not-need-a-business-checking-account/
Quote
As long as your records are accurate one checking account is perfectly acceptable to the IRS. I think one big factor in the insistence on a business checking account is that itís supposed to cover financial shenanigans. Many people like to believe that because something is paid by a business check that makes it a business deduction. Of course, that is not so!


However, these are by no means definitive. They are definitely not citing any laws or IRS publications (not that IRS publications are laws - they're merely the IRS's opinions of them).

And you claim banking regulations. This is not the same thing as a law. If in fact those banking regulations do exist, then sure, they can shut your account. But that's very different from it being illegal.

ETA: Here's another one.
http://www.theguardian.com/money/2005/oct/13/finance
Quote
There is no legal requirement to have a business bank account if you are a sole trader or partnership. It is only necessary for a limited company. However it is quite useful to keep your personal and trading accounts separate especially for completing your tax returns and claiming expenses that can be offset against the profits made to reduce your tax bill.

There are also plenty of articles that say businesses should have a separate account for the ease of keep track of business transactions. But I haven't seen one say that it islegally required for sole proprietorships.

Never said legally required. OP's best option is to talk to a few banks or a CPA about it. They'll tell you exactly what you can and can't do. When I've asked banks in the past, every single one has said that business use of a personal account is not allowed.

Also, for the record, citing an article on The Guardian isn't particularly helpful because the US and UK systems are very different.

johnny847

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Re: Business checking account
« Reply #7 on: January 08, 2016, 06:31:57 PM »
So I'm no lawyer or accountant, but I don't think there's anything wrong with using a "personal" checking account for business expenses. Since you're a one person business, all you really need beyond free, online banking, and online deposit from a non mobile device is the separation of business expenses from personal expenses right?

Doing some quick searching, I have found articles that say the contrary.

http://smallbusiness.chron.com/difference-between-small-business-account-regular-checking-account-3855.html
Quote
A business owner is not always required to establish a business checking account. For example, a sole proprietorship owner can choose to use his own individual checking account to conduct business—he has to ask customers to pay him in his own name. This isn't always the best strategy, however, because it's difficult to separate business from personal activities when you use the same account.

http://junewalkeronline.com/recordkeeping/you-do-not-need-a-business-checking-account/
Quote
As long as your records are accurate one checking account is perfectly acceptable to the IRS. I think one big factor in the insistence on a business checking account is that itís supposed to cover financial shenanigans. Many people like to believe that because something is paid by a business check that makes it a business deduction. Of course, that is not so!


However, these are by no means definitive. They are definitely not citing any laws or IRS publications (not that IRS publications are laws - they're merely the IRS's opinions of them).

And you claim banking regulations. This is not the same thing as a law. If in fact those banking regulations do exist, then sure, they can shut your account. But that's very different from it being illegal.

ETA: Here's another one.
http://www.theguardian.com/money/2005/oct/13/finance
Quote
There is no legal requirement to have a business bank account if you are a sole trader or partnership. It is only necessary for a limited company. However it is quite useful to keep your personal and trading accounts separate especially for completing your tax returns and claiming expenses that can be offset against the profits made to reduce your tax bill.

There are also plenty of articles that say businesses should have a separate account for the ease of keep track of business transactions. But I haven't seen one say that it islegally required for sole proprietorships.

Never said legally required. OP's best option is to talk to a few banks or a CPA about it. They'll tell you exactly what you can and can't do. When I've asked banks in the past, every single one has said that business use of a personal account is not allowed.

Also, for the record, citing an article on The Guardian isn't particularly helpful because the US and UK systems are very different.

Whoops that was my bad on the Guardian.

Altons Bobs

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Re: Business checking account
« Reply #8 on: January 08, 2016, 07:59:36 PM »
If EverBank doesn't work, I think I would walk into a brick and mortar bank (anybody but Bank of America) and chat with a banker for a bit. They might be able to work with you. Maybe try smaller non-chain banks.

What's wrong with Bank of America?

Saving in Austin

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Re: Business checking account
« Reply #9 on: January 08, 2016, 09:16:04 PM »
I have a free business account from BBVA Compass.

protostache

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Re: Business checking account
« Reply #10 on: January 09, 2016, 05:49:09 AM »
If EverBank doesn't work, I think I would walk into a brick and mortar bank (anybody but Bank of America) and chat with a banker for a bit. They might be able to work with you. Maybe try smaller non-chain banks.

What's wrong with Bank of America?

They have terrible customer service and ludicrous fees.  It's definitely a personal bias of mine, so if BAC works for you that's fine. I'll never do business with them again.

kristof

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Re: Business checking account
« Reply #11 on: January 09, 2016, 02:49:11 PM »
I initially went with SBB and then after using their online interface quickly transitioned to EverBank Small Business Checking. They want $1,500 to open the account but there aren't any fees for basic services. I have the Business Checking because I have an LLC. They charge a fee if you have less than $5,000 in there, but that fits my needs pretty well.

Thanks! I hadn't heard of EverBank before. According to what I can see on their site, the $5,000 minimum only prevents you from being refunded ATM fees if you don't hit it (https://www.everbank.com/business/banking/checking/small-business-checking). Do you (or anyone else) know where they refer to other fees charged unless that minimum is met?

Altons Bobs

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Re: Business checking account
« Reply #12 on: January 09, 2016, 04:02:23 PM »
What's wrong with Bank of America?

They have terrible customer service and ludicrous fees.  It's definitely a personal bias of mine, so if BAC works for you that's fine. I'll never do business with them again.

We have not been charged any fees at all, have not had any bad customer service from them either, and they offer free payroll.

Dollar Slice

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Re: Business checking account
« Reply #13 on: January 09, 2016, 08:47:13 PM »
We have not been charged any fees at all, have not had any bad customer service from them either, and they offer free payroll.

Depends how small your "small business" is. We pay a lot of fees because we move a lot of money through the account (profits aren't that high but we have high expenses, so we have about $900,000 being deposited and then going right back out again every year). Last month we paid about $400 in fees just from depositing checks into our BoA Business Advantage checking account.

We are also fed up with the customer service, but some of that will be branch-dependent.

spruce

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Re: Business checking account
« Reply #14 on: January 10, 2016, 05:09:39 AM »
We use BB&T for our LLC. I had heard good things about their business accounts from other business owners, and we've been happy with them. They don't charge fees if you keep a minimum balance of $1,500, and you can deposit checks through their mobile app. Our branch has fantastic customer service.

Bbqmustache

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Re: Business checking account
« Reply #15 on: January 10, 2016, 05:19:28 AM »
Check with local banks and especially credit unions in your area.  It pays to keep your money local!

BlueHouse

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Re: Business checking account
« Reply #16 on: January 10, 2016, 06:11:58 AM »
I have a Bank of America business checking. It's free, I think because I have payroll withdrawn from it monthly. I may have to keep a small balance on the account, not sure.
I usually deposit two checks a month into it and write a few checks against it. payroll, taxes, phone bill). I do everything on the computer or mobile apps.
It's been working fine for me for 8 years, I always get the balance as close to zero as possible at the end of the year, and no fees, ever.