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Opening a Business Checking Account

This article was written by in Banking. 10 comments.

A few weeks ago, I had some free time on a Saturday and decided to take care of a chore I’ve been procrastinating for several months. I’m slowly in the process of formalizing the blogging that I do as an official business. Every few months or so, I take another step that brings me closer to being where I want to be with the organization of my blogging-related activities.

So far, I have an employer tax ID number and I have incorporated in the state of New Jersey, but as of a few weeks ago, I did not have a business bank account.

As I’ve been a long-time customer of Wachovia due to a series of mergers and acquisitions, I started my research with the brick-and-mortar establishment with which I was the most familiar. My biggest concerns in a business checking account are simply low balance requirements and no fees. I’d like to be able to keep most of my business funds in a high-yield savings account.

Wachovia has an account that meets my criteria, so I spent some time talking with one of their customer relations managers. It took around 15 minutes to open the account, during which time she asked about the nature of my business and my financial transactions to ensure that I am not a terrorist and that the account type I chose was appropriate.

It’s a very simple checking account. I received free sets of checks, though they are the same size as personal checks. The account typically has a minimum balance and average balance requirement of several thousand dollars, but these are waived for the life of the account.

Strangely, there is a deposit limit of $5,000. I find this strange as the bank should want to encourage more deposits. This is acceptable for now; most of my deposits will go to a savings account while the checking account will carry only what is necessary for sending payments.

While discussing the account options and trying to avoid a very annoying fly in the office, the financial services associate copied my business declaration, I filled out the application forms, and my account was opened immediately. I scheduled an electronic deposit for the following Monday.

The entire process took place smoothly and quickly. Now I am another step closer to making my side business more “official.” I might as well continue down this path; this side business is earning me more than my day job. (And I’m knocking on wood that will continue.)

Updated February 6, 2012 and originally published September 6, 2007.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 10 comments… read them below or add one }

avatar 1 Anonymous

Flexo, what kind of business entity do you have your blog under?

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avatar 2 Luke Landes

I created a Limited Liability Company, and the blogs and other projects fall under that.

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avatar 3 Anonymous

I’m probably being nosy, but are you willing to give more detail on the percentages that make up your side business income? It’d be interesting to me to better understand the components.

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avatar 4 Anonymous

Do LLC’s come with tax advantages? Here in Canada, you’re either incorporated or private. Not much choice other than that.

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avatar 5 Luke Landes

FrugalTrader: LLCs don’t have any tax advantage of an unincorporated sole proprietorship as far as I know, but you do get the separation of your assets from your business’s assets (if handled correctly, which I am still working on).

Robin: Right now I have my side income broken down by income type, but not by project… I’ll work on getting some numbers together.

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avatar 6 Anonymous

Double check that the $5000 limit isn’t just for cash deposits. I am a branch manager for a large national bank and I know that our basic business account can have the first $5k deposited for free and then after that there is a fee. That is for cash only, you can deposit as much as you want with checks or electronically.

You definitely got it right that the bank wants your money (that’s how we make money) but taking in a lot of cash costs us money: time for the teller to count/strap it, staying within branch cash limits, cash shipments, etc.

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avatar 7 Luke Landes

Thanks for the info, Ryan, I’ll check that out.

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avatar 8 Anonymous

I’m interested in your methodology for deciding on which bank to use. Mostly, that’s because Wachovia’s business accounts seemed lacking to me when I compared the different offerings three months ago for my business accounts.

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avatar 9 Luke Landes

GeekMan: I have my main personal account with Wachovia, and their customer service has always been adequate or above adequate for me. I try to keep my accounts as consolidated as possible.

It would be great if I could get all the neat features, like overnight sweep to a high-yield money market account, unlimited checks, etc., but my business has no need for that at this point, and it isn’t worth the expense.

What did you find lacking at Wachovia?

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avatar 10 Anonymous

Keeping your accounts together at one bank is admirable, and it’s actually what I wound up doing myself, but I don’t think that in today’s electronic age doing so makes anyone’s life truly easier. More emotionally “safe” perhaps, but not really significantly easier. Since most small companies do there bookkeeping and bill paying online it doesn’t really matter what bank you do business with as long as it’s convenient for the business to make deposits.

I didn’t choose Wachovia for many reasons, some of which were their check limits, their fees (waived for you, but still) and my personal experiences with their customer service reps. It’s also why I ruled out places like BoA and Citibank. I liked Commerce Bank very much because they bent over backwards trying to get my business and their business account offerings were very competitive. No fees for the first year($1,000 thereafter), free online banking, free Visa debit card, free banking by phone, etc. And their interest checking account is even better if you can start with a $1,000 balance from the get-go.

However, just like you, I wound up going with a consolidated business checking account with the same bank as my personal accounts. Mostly, because they also had my mortgage and by combining everything I got my bank to waive all fees forever and throw in other great perks like a free safe deposit box and higher interest on my money market accounts.

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