Business checking account?

chelseykcrouch

New Member
I've been reading so many things as I get started and it definitely seems like it is recommended to have a separate account for your business expenses. I can't seem to find an answer, though, as to whether it is important that it be a business checking account. For example, I bank with USAA and we have a checking account, a credit card with them, and multiple savings accounts. Is it OK to just open a separate checking account with them and use that for my business expenses? It seems like it should be, since it seems the point is just to have a clear and simple record of all business-related transactions, but I just want to make sure I'm not missing anything.

I'm very much a newbie, and I very much appreciate any thoughts!
 
Hi Chelsey,

I'm not around the forum much these days, but I just had to pop in when I saw your question. I tossed around the same questions a few years ago. There are pluses and minus to opening an account with the same bank as your personal accounts, and I found that some of them you just can't anticipate by comparing their accounts plans on paper! Also, not every bank will have the same policies, so don't in any way think of what I'm about to write below as a complete list of details to consider.

First of all, I absolutely agree that it's best policy to maintain separate personal and business accounts. If you gain any kind of interest on either account, separate-ness will make your W2s super simple to decide how to file at tax time. Also, you don't have to mentally calculate "how much of that is personal money I should subtract?" every time to look at your balance to know exactly how much immediately available money your business has at any one time. Again, it's just nice for things to be one-glance simple, and they really are with separate accounts.

There are also legal reasons to keep separate accounts if you're registered as an LLC or corporation.

OK, so. Here are a few things to think about before you decide what type of account to open for your business.

1) Do you use an EIN or an SSN to declare your business income? At my bank, that number also functions as a banking ID, so that means if I didn't specifically choose a BUSINESS account, I'd have to use my SSN, which then muddies all that nice separateness again because all the family accounts would be under the same ID. Yuck--messy.

2) Does your bank offer different types/levels of business accounts? Chances are you won't need many of the advanced services that come with big corporate-level accounts (at least, not when you're first starting out). Ask whether they have a simple, low- or no-cost small business or entreneur plan.

3) Is there a service fee for business accounts? How much? Are there ways to avoid having to pay that fee (for example, by maintaining a certain average minimum balance or not exceeding a certain number of transactions per month)?

4) For many personal accounts, you can't have checking unless you also establish a savings account. Is that true for their business accounts also? This is important because it's always possible you might have to limit how much you "pay" yourself if you have minimums to meet on your business savings account.

5) Is online banking important to you? If so, what are the restrictions for business versus personal accounts? If both business and personal accounts are accessible online, does that mean these accounts are connected in other ways? Speaking from uncomfortable experience here...I discovered that I had to close, then reopen my business account under a new EIN in order to keep my family's accounts (opened under SSN) from being accessible online.

6) Does a recognized (Visa, etc.) debit card come with the business account? This makes separate-ness simple if you have to order business supplies, shipping, etc. online. If debit is part of the deal, ask about terms.

There's more, I'm sure, but these are the kinds of details I've found most important in my experience. For what it's worth, my business account is with BB&T, so again, not sure much these details apply specifically to USAA or anyone else.
 
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chelseykcrouch

New Member
AnnaLisa,

Thank you SO much for your help. I am able to open up a separate checking account with USAA under just my name. I am just operating as a sole proprietorship right now, and don't anticipate that changing anytime soon. I appreciate the well thought-out reply!
 
I'm a sole prop, too. By far I've found that's just the simplest way to go, on many levels.

Sounds like you have things on the way to worked out. Nice!
 

DEBUTLER

New Member
After this information and others that I have received about business accounts, I have decided to go with the business account. Your information, AnnaLisa, has been very helpful to me.

Thank You
 
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