Good bank account for a startup? Does anyone know a good bank to have a business account with? I have a some websites that pay for themselves with ad revenue, but they don't make a lot of money. Currently they are attached to my personal account, but I would prefer to have them in a separate account with my LLC's name on it. I had a business account with Bank of America, but they charged me $13/month for having too low a balance. |
For savings, ING has a new business savings account that I'm looking at: http://business.ingdirect.com/products/ofb_savings.asp?s=Sav...
Hope it helps!
You don't mention the number of transactions you do per month or your typical account balance. These will determine which business checking product you need.
I went with PNC Bank's Free Business Checking. http://tr.im/pncbizcheck
- No monthly fee - No minimum balance - Max free transactions: 200/month - Max free cash deposit: $5,000/month
Here is why I chose PNC:
1: PNC Business Checking has RemoteDeposit: A scanner that you can use to scan checks at home and deposit online yourself. (Optional: extra service fee of $50/month)
2: The application over the phone was painless, took 5 minutes, then 15 minutes at my local PNC branch. Walked out with working bank account and starter checks.
3: Good Merchant services for when you want to accept credit cards online
4: 800+ locations/branches (Eastern USA mainly)
So far (two months in) PNC gets 5/5 from me.
EDIT: added optional
I have a Delaware LLC and I live in California. When I tried applying for a Wells Fargo account in California they said I need a Foreign Qualification, which also means I would have to pay the California minimum franchise tax of $800/year.
I'm sure there's an easy way around this but I just set it aside because it's not a priority for me.
Here is some of the rational for why and what I feel this buys me. This, unfortunately does not tell the OP which bank offers a small biz account for less than $13/month but does relate to "what you should be thinking about" instead of what "color-of-the-bike-shed decision" as patio11 points out.
1 - I'm not looking for investment and don't need to worry about having a corp structure suited to investors. If that later changes, I'll get hit with some restructuring costs, but I think I've minimize those costs (thats a discussion for a different post). So an LLC will do and Delaware not required for investment structure purposes.
2 - Delaware is well regarded, aside from investor issues noted above, as its court system is "predictable and efficient" for many types of business litigation. Thats a good reason to choose it, right? I'd say not good enough for an unfunded startup not anticipating investment. Choosing Delaware for it being predictable and efficient in litigation assumes you may one day find yourself in litigation. Have you ever been in litigation? I have. The first thing I learned is you want home court advantage (the second thing I learned is everyone lies, but thats a different discussion). For litigation you want your home town lawyer that you can drive down the street and talk to, not a faceless law firm in a state where you don't live. And in the worst case that you have to do some/all of the legal work yourself, you want to be able to drive down the street and file papers on your own. You can't guarantee jurisdiction being in your favor simply by being incorporated where you live but its a big factor.
3 - Income Tax. One way or another, you will get taxed when you take money out of your entity. There are various strategies to minimize this and its timing, but unless you're a resident of Texas or Florida (are there others?), you are on the hook for taxes in your state of residence.
The above tells me:
A - I should form my LLC in Georgia.
B - open my bank accounts in Georgia
C - ensure all my contracts with my clients unambiguously state the legal jurisdiction is in my home town in Georgia.
This buys me a lot of simplicity and peace of mind. For banking, I do get less than $13 a month, mine is free with a balance of over $300. My bank is a small solid old local bank that you all have never heard of and no, you probably don't want to use them if you don't live here. They always answer the phone within two rings and its always a real person. Most of the time, the conversation starts off with something like "Hi Jon, are you calling from China? I just saw your momma yesterday." ;)
What part of your experience/knowledge with govts, particularly CA's, suggests that "get around" will be easy?
CA will go after you if you earn options/start a company in CA, move out, and then sell.
If you plan on this being a business you have to figure out first how much turnover you have to make to make a go of it, and if $13 / month for a bank is a make-or-break decision then I would suggest you look long and hard at whether or not this is a feasible endeavor.
For sure it is possible that you'll be doing this expense out-of-pocket for a while, but then you just put all these expenses against your future revenues.
A typical small business, including all overhead, such as administration, tax filings, equipment and so on will cost you at least $200 / month, so if your projected profits when this thing is up and running are lower than that you really should reconsider your plans.
This is not meant to demoralize you, I just think that if you doubt about spending $13/month that you have other issues than choosing the right bank.
I chose mine for reliability, easy access to international banking, the fact that my balance is insured to a serious amount and so on, the 'costs per transaction' and 'monthly fees' were the least of the considerations.
The recent crisis has born out the wisdom of that decision, by going with a large but cooperative bank they were hit very little by the affairs that caused their main competitor to now be mostly state property.
For anyone thinking of opening a separate account for business the first place to start would be the bank you use for your checking/savings account. Not only do you have an established relationship (if only in paper form) but the will work harder to please you if there's a chance they'd lose your non-business accounts too.
Anyway, I just didn't want to deal with them anymore so I closed the account.
I'm not recommending wells fargo or anything, but I don't think it matters that much. you are talking less than $20 a month in most cases, and with wells fargo, and I believe most banks, that includes the ability to send checks from a web interface, so I don't think it's that unreasonable.
I've been a personal customer for 7 years and a business customer for 3. A little over a year ago I opened another business account for my startup. Last month I went to them for a line of credit (or even a credit card), and even though the branch manager attached a recommendation to my credit application, it was still denied.
Perhaps this is the case with any large bank, but the bureaucracy is endlessly frustrating. I'd go straight to a small-town credit union if we weren't planning to move the business out of state in a few months, so instead I'm negotiating with Wells Fargo.
https://www.wamu.com/business/checking_account/free_checking...
No monthly fee or minimum balance, up to 250 checks per month.
Large bank and getting larger with Chase acquiring, I didn't see a similar Chase plan so I think I should be grandfathered in as they move to Chase.
This is the closest I found to a "personal account for business"
Works great for me, sounds very similar to the PNC deal also mentioned.
Hopefully, there is a bank in your area among those results. If not, $156 a year is a trivial expense: just forget it and focus on building your businesses.
CA happens to be rather agressive about it. FWIW, that's why professional athletes end up paying CA taxes. (Interesting question - suppose that your team plays a game in CA but you don't. Do you owe? Does the answer depend on whether you could have played? I heard about a lawsuit arguing about whether practice time, presumably out of state, counted in the apportionment.)
NY is also rather aggressive. I heard of a lawsuit involving an out of state employee who got dinged for visiting corporate headquarters.
I don't recall how the lawsuit (that I know about - there were probably others) over "move out then sell" wrt CA ended. Your tax attorney should.
And no, you shouldn't rely on tax information that you get on HN. Even if I get all the details right, you have no way to know what applies to your situation.