One of the biggest steps in setting up a new start-up business is opening your first business checking account. Both the process and the reality of having business checking accounts gives legitimacy to your company, bolsters your confidence in your own ideas, gets you ready for taxes, and makes you a “real” business. Here’s what you need to know about choosing a bank and a commercial checking account that’s right for you, as well as how business checking accounts can help you.
Choose Accounts
The first step is understanding what type of business checking accounts you need. You may need more than one, because you may need to take in payments, pay out taxes, and manage payroll. Having separate accounts for your separate financial transactions can make sense for your business, especially if you have high volume, high taxes, or lots of payroll. If your business is quite new, it might make sense to limit yourself to one or two business checking accounts. Your accountant or tax attorney is the one to ask before you open a business checking account.
Choose Banks
Once you have an idea of what accounts you need, you’ll want to choose your bank. It’s important to understand that some of the things that make a bank great for personal checking accounts may not make it so great for business accounts. Many credit unions are a great choice for personal finances but do not offer any kind of business checking account. Some banks will waive all monthly fees as long as there is a minimum account balance, while others may offer interest rates. Some banks will let you open accounts online, while others will require you to come in and bring all the paperwork with you. Which one you choose will depend on your particular needs and preferences, as well as location, the volume of transactions, and how much money you anticipate being in your bank from month to month.
Gather Paperwork
One of the most important parts of opening a business checking account is having all your paperwork in order. Different accounts will have different specifications, so it’s absolutely vital you check with the bank, and possibly with your accountant as well, before heading out. At a minimum, you will need your personal information, your Social Security number, and a tax ID number. You will probably also need your business license, all business filing documents, and any other kind of licenses that the state requires in order for you to do business.
Check Your Name
When your business is small, you can give it whatever name you like. Once you start talking about a business checking account and accepting payments and sending out payroll, it becomes very important to make sure that your business name is not already trademarked. This is something that you can do by checking with the US Patent and Trademark Office, which offers an online search tool, as well as checking with your county clerk and paying a registration fee to file for a business name and your community.
Set Up a Merchant Account
You’ll also want to set up a merchant account so that you can accept payment from your customers or clients. If you are going to accept credit card payments, you will need a credit card merchant account as well as a business checking account and a way to process those payments. Online payments are very convenient, but as you process them be sure that you’re keeping careful track of taxes that you owe, all your business expenses, any donations that are made, all your payroll costs, and generally just every cent that comes into or out of the business or any business account. This will make it easier when it comes time to file your taxes.
Your business account is essential if you want to be a legitimate business and make money. It’s also the best way to smooth the road once tax season rolls around. Talk to your accountant or tax lawyer, discover what accounts you really need, choose the right bank, and get started making money today.
