Web Hosting Talk : Web Hosting Main Forums : Reseller Hosting : new web hosting company - how to set-up bank accounts and keep books

[EWS]

I've been making web sites for a long time and now I've developed a company to offer web design and web hosting. I've registered the company as an LLC but so far I still keep the money in my own personal bank account. What do other web hosting companies do? Right now it's extremely hard to keep track of personal expenses vs, business expenses and I also NEED to be able to accept checks with the business name instead of just my own name. What do people suggest? A DBA account? Online banking? If I set-up a new account for the business, would I pay myself a salary every month to deposit in my sperate personal account? (write a check to myself) Thanks

[X-treme]

Well to answer your questions.

Most banks in the US require that you have a Registered Fictitous Name in order to open a DBA account.However this depends on your bank.

As for your income. If you plan on claiming it on your taxes you can apply for a EIN. I would recommend that you do pay yourself a weekly salary out of the business profits. This will help you distinguish between expenses and profits at the end of your tax period. (This assumes you are doing this fulltime).

You can get the Fictitous name application from your local county clerk. There is a onetime fee of $50.00. Make sure your name gets approved before applying for the EIN if you choose to do so. The EIN application can be found on the IRS website.

Hope this helps.

[JayC]

You absolutely should have a separate banking account, and should keep all transactions related to the business separate from any personal transactions. If you are the only owner of the LLC this isn't as essential as it would be if there were more than one owner, or if you had incorporated, since the LLC structure essentially allows you to pay the business taxes on your individual tax return. But you will want to be able to separete the business income and expenses from your own come tax time, and the $15 a month or so for a busiess checking account will be worthwhile.

Then, yes, you can write a check for yourself. But I wouldn't see any reason to treat yourself as an employee and add that extra layer of taxation -- that would defeat the purpose of an LLC. The check you write from the business to your personal account would simply be profit of the business. You're just moving it between accounts, in the end it will all be the same on your tax return. Again, this is true if you are a single-person LLC. IF there are other owners it gets messier.

But really you are getting into some complicated tax issues, and should talk to an accountant about your particular situation. It's really worth spending a couple hundred dollars a year for professional advice (assuming you are making enough profit that the idea of paying yourself even comes into play!)

By the way, if you are an LLC (or a corporation) you don't need to register a "fictitious name" or DBA, unless the name you want to use is not the name of the company. To open a business account you'll need whatever certification you received from your state regarding formation of the company.