XBanker

7 Reasons to Open a Business Checking Account

May 26th, 2008

1. Suppliers. Some local suppliers require a voided business check before extending lines of credit.
2. Relationships. Having opened over a dozen business checking accounts, I have found that the process is easier if I open a second or third account with the same bank. It has been my experience that setting up the first bank account with an institution takes ten times as long as successive accounts with that bank. I recommend that you open at least one account with 3-5 major banks. You never know when these relationships will come in handy.
3. History. A few months ago, a conversation with a banker at a national bank included the topic of new guidelines his bank was implementing. I took special note of a two-year active checking account history requirement before a line of credit or loan would be issued to a business. It’s never too soon to open an account.
4. Merchant Accounts. If you have a merchant account you will want those funds to be deposited into a business account, not your personal account.
5. Forms of Payments. In addition to accepting cash and credit cards as forms of payment from your customers, you may decide to accept checks. If your customers have to write checks to you personally, you will lose credibility very quickly.
6. Making Payments. In addition to accepting payments, making payments to your vendors with personal checks also looks unprofessional and diminishes your standing.
7. Separation of Funds. One of the fundamental principles of business compliance is separating your personal money from your business money. Following this one principle can help you strengthen your corporate veil. The liability protection offered by a corporation is only valid if that corporation is treated like a true business. The complete separation of your business and personal funds is a crucial early step.

3 Responses to “7 Reasons to Open a Business Checking Account”

1. Tomas Says:
   May 26th, 2008 at 11:34 am

   There is one issue you should consider in selecting a bank for your biz. acct.
   Should you pick a small, local bank with an excellent person to person service, phone calls answered by human being ( not a “press one for english, two for spanish..”.) These kind of banks usually don’t offer the typical “unsecured lines of credit”, but a business loans collaterized with material assets.
   On the other hand, banks like BofA, Wells Fargo and others have the funds and the programs for “unsecured lines of credit”, but their banking “sucks”, for simple reason: They are so big, that you & your business are just a “case numbers” for them.
   I have 3 very active operating accts. with a bank across the street from my office ( excellent relationship & service, but no biz. line of credit) and also 2 accts. with a bigger banks ( have biz. credit ), but those accts. are very rarely used for everyday business purposes.
   I guess, you can say, they are open for other reasons or “just because”
   It is interesting how you can help to decide the future of your business funding just by thinking about a simple thing like where and how many biz. accts. to open..
   Good post mr. X

2. Starting a Business - 8 Important Steps to Starting Up | Blog of Asia - Guide to Asia, Business, & News Says:
   October 2nd, 2008 at 1:39 pm

   [...] 7 reasons why you should open a business checking account: http://x.thexbanker.com/2008/05/26/7-reasons-to-open-a-business-checking-account/ [...]

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   March 2nd, 2010 at 8:23 pm

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