Forums: Discussions for entrepreneurs and small business.

Hey Startup,

I am getting ready to start a counseling private practice. I already have my DBA and I am considering how I should separate my business and personal accounts. I have been shopping business checking accounts at different banks, but a friend asked the question: "Why couldn't you just open a separate personal account since your DBA is your name?"

So I'm posing that question to you.

Thanks in advance,

The Cajun Counselor

Keep your business income and expenses completely separate from your personal banking. The most dangerous thing you can do as a business owner is to use your business as your own personal piggy bank.

to clarify "dangerous" what sambou means is 1) avoid IRS suspicion and potential future issues and 2) limitation of liability in the event of lawsuits

open a separate account, it will save you headaches later... plus it makes it MUCH easier to keep business expenses separate from your normal living expenses

Exactly. Use a tax ID and get a bank account.

I'm in the middle of starting a small business and find myself asking this same question, and glad that there is consensus among the answers here.

I've also found a startup boot camp/workshop (http://gosustainably.com/i2i) that I'm going to take to answer questions like this more in-depth and to answer the questions that I haven't even identified yet! The workshop is put on by actual attorneys, accountants, etc. and will address setting up, financials, taxes, IP, marketing, networking, etc. Sounds like it will be a great resource!

I think you definitely need a separate business checking account. As I am starting out my business now and actually seeing revenue, I've decided to open a small business checking account because I want to keep my personal and business finances separately. I've heard that mixing the two can get quite confusing when tax times roll around. In my opinion, yes open a business checking account.

a) it makes for easier bookkeeping

b) it fulfills the "separate entity" concept and can protect your personal assets in the case of a lawsuit.

c) by treating your business as a separate entity you help to make the case that it is indeed a business and not a hobby in the event you have losses to deduct.

Don't comingle business and personal finances. Use a seperate accounts for each activity.

I'm sorry to drag up a post from months ago but I'm currently facing the same question.

I think everyone has missed the point of the original question. I don't think Cajun_Counselor was asking if they should have a separate account for their business, they were asking if they had to have an actual "business" account.

The idea is that when you start the account that will be used exclusively for your business some banks require a large minimum deposit and sometimes charge fees for "business" accounts but only require a small deposit and no fees for "personal" accounts.

So the question is, when you start your business account, does it need to be an actual "business" account, or can you start a fresh new "personal" account that will be used just for your business and avoid the fees?