In my last post, I talked about how to get started, how to get the paperwork rolling for your new business. This time, I wanted to start talking about some of the key pieces you need for your business.
First order of business, get yourself a business checking account. Now this initially sounded like an easy task to me. So I started checking out the banks in my area and quickly realized that business checking accounts have a lot more options than your average personal account. Here’s some of the big things to keep in mind when selecting your bank/account type.
1. First and foremost, you can’t open a business bank account without your business paperwork. Normally, your Article of Incorporation or some similar form of proof that you are truly a business and registered with the state you are opening your account in. When I moved to NC from MN, I decided to switch banks. I had been with US Bank and I loved them, but they had no presence in NC/SC, so I had to make a switch. Before I could open any account, I needed the actual NC paperwork that proved I was licensed to do business in that state.
2. Bank Fees. Does the account carry a monthly fee? If you carry a high enough balance, is the fee waived? Is it likely that you will be able to carry that balance every month. My account charges me $12.95 every month if I don’t maintain a $5000 balance for the entire month. This can add up quickly, so I do everything I can to maintain that balance. Make sure you know exactly how and why your bank will charge you fees. Some of the other fees to check on are: Does your bank charge your for ATM’s that aren’t in your network? Are you charged for viewing your checks online? Do they charge you to download your transactions into Quicken or Quickbooks? Do you earn interest on your account? All these add up quickly, especially when you’re just starting out. You need to look at how you bank to decide which fees don’t matter and which ones will kill you.
3. How long will the bank hold your checks after you first open your account? Now this is something I never thought of. When I first started with my bank, I was getting paid by check. Now since I had a bank account, I figured it was no big deal. I quickly found that until the bank thinks you’re reliable, they will hold your funds for 7 – 10 days. Now, if you’re just starting out, this is a long time to have money just sitting in your bank that you can’t spend. Many banks will release your funds immediately if you direct deposit it, however, this isn’t always an option. Just be prepared for this possibility.
4. Can you do most of your banking online? Does your bank offer free online bill pay. For me, this feature is invaluable. I spend a lot of time on the road, so I want to be able to pay all my bills online, anytime I want. Make sure to find out how much your bank charges for this convenience.
5. Can you tie your personal account to your business account? this was another important feature for me. Since I setup as an S-Corp, it meant that I would be paying a salary to my employee (me). So I wanted to link up my accounts so I could do easy fund transfers from my business account to my personal account.
6. Extra things. Most accounts will allow you to do wire transfers, but only after you’ve filled out some additional paperwork. For example, I needed to move some money around in a hurry. Well, with the new money laundering laws, any large checks must be held for 7 days by any account. A wire transfer was my only option. Well, I called up my bank, and they informed me that I would have to visit a live bank person, fill out some paperwork, and then I could do a wire transfer over the phone. Well, I was on the road, and my bank wasn’t in the area. I made it work, but it took a lot of phone calls and extra stress. My advice to anyone starting out, get yourself set up to do wire transfers. You may never need it, but just in case, have the paperwork in place.
Wow. I forgot just how much effort it was to get a “simple” bank account set up for my business. Anyway, next post, I’ll hit the next set of needs to focus on for your new business.
Thanks for reading,
Mike
Mike