I am launching my hosting business soon and am trying to ensure I have all the bases covered, and I was wondering what the smaller hosting startups are doing for bank accounts. I just recieved my business license information back from the State (WA) and can now legally do business under my business name, so opening a business account at the bank using my trade names can be done now. However for a small startup, it would save a little money for the time being if I were to use an existing personal checking account. Are there any major disadvantages or problems with using a personal checking account? (Assuming I keep very clear record of which transactions are for the business)

Also, I am using 2checkout for payment processing at this time, so I do not need a merchant account at this time.

Any information or past experience would be helpful :)

Thanks,
Ben Murray

Greetings Ben:

1. Check with your local chamber of commerce. They should be your first stop for a lot of recommendations.

2. While not directly related to your question, also check to see if the small business association has a SCORE near you. SCORE is made up of retired business people who often donate their experience.

3. More and more banks have similiar checking deals for small businesses as for homes where you can keep a very small balance; shop around.

Thank you.

As a former banker here in WA I suggest you open a small business account with a local bank. They can help quite a bit and you can save yourself a hassle in the long run.

I'm currently using my personal checking account, too. Legally if you're a sole proprietor it's fine to do that, and my business volume is so low it hardly justifies a separate account. I'd like to have a business bank account and will get one if my business grows quite a bit more, though I just don't see the point in paying extra right now just to have funds in a separate place. If I ever needed a merchant account for credit cards I'd go ahead and make the leap, but again, that will depend on future volume.

Go to your bank and ask to open a business checking account. This will be perfect for you as it will separate your personal funds from business funds. Im sure its like 2 bucks a month for the account. Good luck.

Originally posted by phpjames
Go to your bank and ask to open a business checking account. This will be perfect for you as it will separate your personal funds from business funds. Im sure its like 2 bucks a month for the account. Good luck.

2bucks for a business bank account? They store the money in a piggy bank and the atm gives out monopoly money?

After looking around, it seems it's not as expensive as I thought for a business account. (although still more than my current free checking.) I contacted my current bank and they do offer two accounts designed for small business/sole proprietorships with a $9.00 per month fee if the balance is under $2500, and no fee if it's over that amount.

Tomorrow I am going to stop by two or three other banks in my area and see what sort of plans they offer, although for convenience unless someone else has something significantly better I think I'll stick with the $9.00 per month just so the account is at the same location as my personal checking is.

Do you have access to a credit union? I use a credit union for my personal accounts and business accounts. Both have free checking and no monthly fee's. You might want to check around your area for any credit unions and find out how to join.

You should never have to pay a monthly fee for banking. If they insist, go around the corner to the next bank. Surely someone around is running some sort of special for free checking. If not, look into business savings that severly limits your outgoing transactions (do you really need to write more than 10 withdrawls a month?). HTH

Regards,

Jeff

After searching around, the cheapest business account I found has a $5 monthly fee...and after checking out the fine print, they charge for any extras in their business account that normally is free with personal accounts. (such as $12.95/month for online access, $25.00 to get a debit/check card, etc)

So (at least in my area) the $9.00 per month plan that includes all the extras is definitely the cheapest for the features it has. I don't want to limit myself too much by getting a very limited account, and having a check card(visa/mastercard) is one of my requirements to use for paying some of my online costs.

Also, I did check out the only credit union I can join in my area and their basic business plan was a $10 per month fee.

VeriCentric, do you mind posting which bank it was that has the $5/month fee? The bank I use for personal checking is also $9/month (I suspect it's the same one you use). I'm in Washington too.

Although I'd planned to stick with my personal account, tonight I received a check made out to my business name. Since I suppose it would look terribly cheesy to return it and ask for a check made out to me personally, business bank account here I come!

Riverview Community Bank and Wells Fargo both have a $5.00 per month plan, but charge a little more for the "extras". If you just need the basics they would probably work well. I'm from the Vancouver area, so I'm not positive on how things would be for you depending on which part of the state you are in.

Today I signed up with Bank of America with their Business Checking plan for $9.00 per month, but it includes (for sole propietorships) the Visa check card and online banking at no extra cost. Due to the fact I wanted the Visa check card to pay my server costs so I could stop using my normal credit card I went with this plan instead of the other banks:

http://www.bankofamerica.com/wa/smallbusiness/index.cfm?template=check_fcb.cfm

They also have a version of it that earns interest, but the current rate is 0.20% (yes, that's zero point two :eek: ), so I didn't bother with that one.

And as a side note, do you have the WA license to do business under your business name? That's one thing that's required to get the account started.

Wells Fargo, hmm, I hadn't thought about them. I found the $9.00 rate on the Bank of America site and I looked on the Washington Mutual site but they don't list rates so I'll have to call them during business hours. I don't need online banking so $25 for a check card would be fine for me since the cost would be offset with just a few months of lower fees. .20% interest, ha! That's a good one.

Yes, I am licensed to do business in Washington under my DBA name as a sole proprietor. I'm in the Seattle area, so quite a bit north of you.

Thanks for the info!

I use First Federal savings and Loan. The business checking is $5.00 if your balance is under $2500 and free if over. They do have a limit on the amount of checks and withdrawals you can use without a fee, though.

A lot of times banks would reserve the free business checking on a branch by branch basis as my bank does. If I opened my account at another branch of the same bank less than half a mile away I would have to pay $12.00 monthly for the same account that I'm getting free right now.

Don't worry about the $5-$15 a month you pay to your bank. The most important thing is building a good relationship with the branch manager. Once you do that there's a good chance he'll waive your fees and would help you receive funding, larger credit line etc.

Many banks cater specifically to small businesses or have a person in the bank that is specifically there to deal with their small biz owners.

For the past 2 years, I have done personal banking with an internet bank called Nexity. Very good rates, good service and not expensive. Also, if you exceed your service agreements once in a awhile, they will just send you a gentle reminder, rather than salpping you with a service charge. The only drawback is no physical presence, for those who like ATMs, bank tellers and all.

I am getting ready to open a small business checking account with them. If I remember correctly, there is no fee if you have $1,000 or more in the account and only $7 if you have less. Check my numbers at their site: www.nexity.com.

Hm, thanks for the posting about nexity, i'll have to check them out, I use NetBank myself for my personal checking so its normal for me to not have a local branch to go to :)

*LOL*

Just noticed their based out of Birmingham lol... kinda local to me after all.

Did you tried http://thebancorp.com ?