I've been running my woodworking side business for about a year and a half now and I'm still using my personal checking account for everything. It's getting messy trying to separate receipts and figure out what's business versus personal at tax time. I want to open a proper business account but I'm not sure where to start or what to bring with me. I'm a sole proprietor if that matters. Any advice on what to expect would help.
Banking
I want to switch from personal banking to a business account
As a sole proprietor it's actually pretty easy. Most banks will want your business name registration or DBA paperwork if you're operating under a name other than your own, and a second form of ID. Some ask for an EIN but a lot of them will let you use your SSN.
Get the EIN anyway. It's free from the IRS and it keeps your SSN out of more places.
Fair point, can't argue with that.
Watch out for monthly fees. A lot of the big banks waive the fee if you keep a minimum balance or make enough transactions, but read the fine print before you sign. I got hit with a $15/month fee forr a year before I noticed.
That's the kind of thing I'm worried about. Did you end up switching again or just meet the minimum?
Met the minimum eventually but honestly I should have gone with a credit union from the start. Lower fees across the board in my experience.
I'd also think about whether you need to accept card payments or just need a place to keep the money separate. Those are kind of two different problems and some banks push merchant services hard when you open the account.
Seconding the credit union idea. Mine gave me a business account with no monthly fee, and no minimum, which the big banks weren't offering me at the time. Just fewer branches, so check that it works for how you deposit.
Right, and if you're depositing checks from customers that matters. My credit uniOn has a decent mobile deposit so it worked out fine.