Business Checking Account

Discussion in 'Business Operations' started by boxoffire, Oct 13, 2004.

  1. boxoffire

    boxoffire LawnSite Member
    Posts: 169

    Hi, I have a general question about opening a business checking account. I already have a personal one, and I'm starting out as a sole proprietorship and I am the only employee. What are some good reasons to open a seperate account in my businesses name? Does it make it easier for tax purposes? If it's my only income, when would I use my personal account? I mean I'm going to need my money for bills and whatnot, and it seems silly to deposit money into one account, only to have to xfer over to my personal account to pay my bills. I'm just wondering what the big deal is for doing this if you are on your own. Just curious. Thanks for opinions/suggestions.

    Adam
     
  2. b727guru

    b727guru LawnSite Member
    Posts: 56

    Wow!
    I was just going to post a similar question!!!

    Just paid for my business licence and need to purchase equipment.
    When I go to apply for credit, I'd like to purchase it with my company name as oppose to my name. Does this make sense? I want to build credit under the company name.

    How do I go about doing this?

    Do I open a business checking account first?

    Is that necessary?

    Since it's a new company, do I have to open a business account under my name and "dba" next to it?

    Thanks for all the help in advance.
    Mario
     
  3. Metro Lawn

    Metro Lawn LawnSite Silver Member
    Posts: 2,101

    Taxes are just one aspect. It is easier to keep tabs on business money if it is in a seperate account. I use a check card from my account to buy everything. Gas, parts, ect. I get a statement every month that shows what went in and out. Second thing is " are you going to run your business with a trade name?". ie Joe's Lawn Service ect. When a customer pays you with a check made out to the company, you won't be able to cash it without a business account.
     
  4. tonygreek

    tonygreek LawnSite Gold Member
    Posts: 3,393

    absolutely open a business account. some banks are now offerering free small biz accounts, so there's no reason not to. and as the others said, it's more professional to have the customers make the check out to your business.

    you should always keep a clear separation between your business and personal life so that everything is easy to track, and easy to present to your local IRS agent when you are blessed with an audit.

    Tony
     
  5. boxoffire

    boxoffire LawnSite Member
    Posts: 169

    Thanks Tony and Metro, you make perfect sense. Lady wrote me a check yesterday and I had her make it out to my name and not company name, but I can see that being an issue down the road. I like the check card idea in company name as well and making equipment purchases with it as well as gas. Let me ask this about getting checks from customers. I know some put cash in their pockets, it's no big secret really. But if you get a check made out to you and not your company name (in which you have an account set up for), can you cash it in your other personal account and probably not need to worry about reporting? Haven't done this, and don't know if this is the right place to ask such a question, but what the hey.
     
  6. Fantasy Lawns

    Fantasy Lawns LawnSite Bronze Member
    Posts: 1,913

    This is one of the first fundamental steps to starting a business ... in the long run it begins the seperation of personal & business .... creates credit .... looks more professional n will be much easier fore tax time

    If you move $ from your personal to business it is much like a loan .... when your business pays it back it's not income

    Talk to or get a CPA is the next good step
     
  7. eruuska

    eruuska LawnSite Senior Member
    Posts: 454


    Why would you want to do this? Seem so me that the only reason is to defraud the IRS (ie, me and everyone else). Yes, there's nothing stopping you from doing so, but one of the recurring themes here at LawnSite is scrubs who don't have insurance and don't pay taxes.

    Just my .02,

    Eric
     
  8. tonygreek

    tonygreek LawnSite Gold Member
    Posts: 3,393

    <<can you cash it in your other personal account and probably not need to worry about reporting? Haven't done this>>

    if you were to be audited, your personal finances would also be looked at. if you have a bunch of checks showing as being deposited into your personal account, say $35.00, that matches the $35.00 check amounts in your business account, the IRS term you would be looking for is "Red Flag".

    in other words, bad idea.

    Tony
     
  9. b727guru

    b727guru LawnSite Member
    Posts: 56

    Yeah, but if you cash the check at their bank (the customers) there's no paper trail...
     
  10. eruuska

    eruuska LawnSite Senior Member
    Posts: 454

    That don't make it right, though. I value a good night's sleep very highly.

    Eric
     

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