I was advised about a year ago to open a separate checking account for my business, and I finally did it! I had no good reason to put it off, just excuses–I can’t take the kids in, the bank is half an hour away, I don’t know what I’m doing–but one day I found myself kid-free and next to the bank and now it’s done. Based on my experience, here’s what you need to know:
Separate bank accounts aren’t just for “big” businesses
My business is growing, but it’s still itty bitty. So small that I made less all year than my husband makes in one paycheck. Kinda sad when you think of it that way, but I worked hard for it. Now that I have a separate account, I find that my little income doesn’t just evaporate the way it used to, and I know exactly what I have when I want/need to reinvest.
A separate account makes tax time easier
No matter how little I make, the IRS wants to know about it. It’s actually in my interest to convince them that I have a real business and not just a hobby, and that means turning a profit for two out of five years, so good records are a must.
It’s simple to start a separate account
In reality, this is what was holding me back; my natural shyness made me very hesitant to go in and ask for an account until I was 100% sure I knew what I needed to know. I had asked the bank and, in my case, all I needed was my DBA paperwork and/or a business card. The fact is, you can’t be 100% sure that you know everything–after I’d waited for 30 minutes and conferred in an office for 15, I was told that I couldn’t open an account after all. However, for reasons not clear to me, that was not the final decision and I walked away successful. The moral of that story is that it’s best to just go to the bank. It will work out, even if it takes more than one visit, and it’s worth it.
You may not need checks.
Checks would have cost me $30 and my check card was free. I can pay all of my business expenses with the card, so I opted to wait on checks until I need them for some reason, which I expect to be never. Every little savings counts.
Don’t forget to connect to your account online.
I created a Paypal account for my new checking account right away. This was actually one of the main reasons that the separate account was recommended–if the IRS comes to call, it would be there to back up a whole lot of my receipts (although it doesn’t keep those records forever, I’ve found.) I also changed my info on Etsy so that I will be billed/paid through the business account. I will need to change my info with my business card company, etc.
When it comes to making a business bank account, just do it! You’ll be glad you did.
Now I’m curious, has anyone else had any snags in getting their business banking started?