When I worked at the bank, I opened many business accounts for clients. They do take a little more time to open when compared to just a personal checking account. I learned a lot about businesses and business checking accounts after opening a bunch of them! If you’re thinking of starting a business or opening a business account, I can share with you some tips and tricks that will help expedite the experience with your banker. Here are some of the things I learned:
-Checks made payable to a business must be deposited to a business account. For example, if you are a dog walker and a client writes the check to Joe Smith Dog Walking, an account must be set up that way to negotiate the check. If you don’t anticipate receiving more checks made out that way, I’d personally recommend asking the client to re-write the check just in your personal name.
-You don’t have to have a business set up through the state to open a business account. A DBA, or “doing business as” is a business where a person is acting as the sole proprietor. These were very common for people who just wanted to open a separate account for their side hustles. We opened a lot of these for people selling Lularoe, Young Living, doTERRA, Plexus, Avon, Mary Kay, Thirty One, Scentsy, and the like. Also, many lawn cutters just starting out would choose this option until they got their business paperwork set up.
-It’s a really good idea to have all the required paperwork in order before the account is opened. When the banker starts opening the account, there are many screens where information has to be typed in. In our state, for an Limited Liability Company (LLC), one just has to apply for a tax identification number (TIN) and articles of organization and it’s an official business. By having the paperwork first, the account opening process will take a fraction of the amount of time that it would if the paperwork wasn’t there.
-Make sure the fees and terms are explained before the account is opened. A lot of times there are fee-free accounts but sometimes there are catches. For example, there may be a fee if so many checks are written or deposited each month. At the bank I worked at, if there was more than a certain amount of cash deposited each month there was a fee per hundred dollars! The same principle applied to checks-if there was more than 100 checks written a month there was a small fee per check to cover processing. Look over the terms and conditions for business banking accounts before the account is opened.
Opening a business bank account really doesn’t have to be a difficult process. Having the required paperwork and reading the disclosures are the most important things for the business banker. If you’ve been thinking about opening a small business, don’t let the business banking aspect of it deter you. It can be really easy!
Have you ever opened a business bank account?