Opening a business bank account will help ensure that personal and business funds are not co-mingled, and make running your business simpler—provided you set up your account properly.
Be sure to avoid the following business bank account pitfalls:
- Failing to open the account right away: Many new business owners or entrepreneurs get started in the business, while using their existing personal bank account. Ideally, open your business account immediately, to cleanly keep business and personal funds separate for tax purposes.
- Missing documents: Every bank and credit union requires slightly different documentation to open new business accounts. Check their website or call to find out in advance. Then, you’ll be able to complete the job in one trip. Most importantly, apply for a separate TIN (Taxpayer ID number) or Employer ID Number (EIN) for your business, to avoid using your personal social security number.
- Not considering authorized signers: If you have employees, you might find it convenient to allow them (or the most senior one) to write checks against the business banking account. It might also make sense to require two signatures per check, to keep things honest. If you have a business partner, he or she may be an authorized signer with access to the account or might be a co-account-owner. You may be able to add signers later, but establishing at the outset is best.
- Not shopping around: Your personal bank may be your first thought, however, other banks, including specialized business banks, may offer lower fees. Also, consider credit unions that you may be eligible to join. When comparing, add the cost of monthly maintenance fees, if any, plus transaction fees for deposits and checks paid, and more.
- Forgetting minimum balance requirements: If your chosen account requires a minimum balance (that you cannot consistently maintain) to avoid certain business banking fees, you might end up paying more than you bargained for.
- Consistent business name on checks: Using DBA, instead of your exact business name, can create problems accepting credit card payments or in other situations where an exact business-name match is required.
When you need funding for growth, after opening your new business bank account, contact the experts at Steadfast Funding Partners.