- Think you can get away with not having
a business checking account as a small business owner?
Think maybe it's nice to have, but it's optional,
or maybe it's just too much work?
Well, well, well, think again, and stay tuned,
because I'm gonna tell you not only why you should
have a separate business checking account for your business,
but why you may actually need a separate
business checking account for your business.
(bright music) (keys clicking)
Hi, everyone.
I'm Attorney Aiden Durham with 180 Law Co in Colorado.
Welcome back to "All Up in Yo' Business."
Before we get into why you absolutely need
a business checking account for your business,
please do be sure to subscribe
if you haven't already done so,
click that little bell so you get notified
anytime I post a new video, and of course,
check the description for links
to additional information and resources.
I also wanna give a huge thank you
to our very special partners for this episode,
our friends over at Relay.
Relay is a no-fee online business banking
and money management platform designed
to help small businesses be crystal clear
on what they're earning, spending, and saving.
As a small business owner, you can do so much with Relay.
You can organize your expenses and cash reserves
with up to 20 separate checking accounts.
You can issue up to 50 physical or virtual
MasterCard debit cards for yourself or your team,
send and receive ACH transfers, checks, and wires.
You can give your team members,
financial advisors, accountants, CPAs,
secure, role-based access to your accounts,
and get personalized customer support over phone or email.
Now, you guys, hold onto your butts,
because I am coming in hot with a killer offer
from Relay for my "All Up in Yo' Business" fam.
If you use my affiliate link
that you can find down in the description,
you will get 50 bucks.
That's right, 50 bucks credited
to your new account with Relay.
Just use that affiliate link in the description,
open and fund a new account, and boom,
that 50 bucks is yours.
And keep watching, because I'm gonna tell you
about all the super cool things that you can do
with your new Relay business checking account.
All right, so first let's talk about why you might want
or need a separate business checking account
for your small business.
And these things are gonna apply
whether you're a sole proprietor, LLC,
regardless of the type of business
or entity that you're operating.
First off, having a separate business checking account
is going to help immensely with simplifying taxes.
In fact, the IRS even recommends
that you have a separate account for your business.
So as a self-employed person,
unlike if you're an employee working
for somebody else or another company,
we're not having taxes withheld from our paychecks,
so we have to make quarterly
estimated tax payments to the IRS.
And let me tell you, calculating your tax payments,
your quarterly estimated payments, are gonna be a huge pain
if you have all of your business income and expenses
in the same account as your personal money.
You'll have to go through, identify,
what's a personal transaction versus a business transaction,
"was this money, this check, was that something my..."
"Was that a birthday gift from grandma,
"or was that something that a client
"or a customer paid to me?"
"This money that I spent at Office Depot,
"was that for office supplies for the business,
"or was this something for my own personal use?"
None of that mess.
Don't even bother with having to do that.
Just have a separate business checking account,
and you know everything that came in
and went out is business related.
And you're really gonna be thanking yourself
if the IRS ever wants to do an audit of your business,
because if all of your business transactions
are in your own personal account,
the IRS is gonna be looking at those business transactions,
but they're also gonna probably be seeing
a lot of those personal transactions too.
So now you've got this increased scrutiny from the IRS
at what you're doing with your own personal money too.
And why you put yourself at added risk or exposure
if you don't have to?
It's also gonna help just generally
with bookkeeping and accounting purposes.
Again, you're not gonna have to filter through transactions,
figure out what was business, what was personal.
We know everything business
is in this account or these business accounts,
and everything personal is in my own personal account.
Having a separate business checking account
is also gonna help with credibility
and professionalism for your business.
I saw a comment on one of my other videos,
someone asking something along the lines of,
"why can't I just have a separate personal account?"
Not necessarily a business account,
"why can't I just have a separate personal account
"that I use for business stuff?"
Well, let's think about that.
If you need someone to write out a check to your business,
or if you're doing online payments
charging clients or something,
they're gonna have to write out
the check to whoever owns the account.
And if it's your personal account,
they're writing that out to you,
or the charge on their bank statement
will say your name rather than your business name.
If I were hiring someone, and they were a business,
and I was making the check out to them personally,
that would make me feel a little uncomfortable.
I don't know that I would like that so much.
It just makes you look like you're a legitimate business
because you have an actual business checking account
that people can make payments to.
A separate business checking account is also gonna help
with the growth of your business in the long run.
If you hire employees, have to deal with payroll,
payroll taxes, you're gonna want all of that
to come out of a business checking account.
And if you set up that account from the beginning,
it's gonna be so much easier than trying to,
later on, get this established,
because now we have employees,
and we have to deal with all this extra stuff.
Don't wait, just do it now.
You kind of need it, and you're gonna want it
in the beginning anyway, so just do it now.
And having that separate account for your business
is going to help with getting credit or loans
or outside funding for your business as well.
And the last reason not only that you should have
a business checking account for your business,
but the reason you actually, actually, absolutely need it
is for liability purposes if you're operating as an LLC
or a corporation or any kind of separate legal entity.
I'm sure you guys have heard me talk about this before,
unless this is your first time here.
In which case, you'll probably hear me
talk about this a lot more in the future,
but the whole purpose of having an LLC
is liability protection so that what happens
to the business doesn't happen to you,
your personal assets are protected,
your personal money is protected.
And the way we get that protection,
aside from just setting up the LLC, that is not good enough,
we have to keep things separate,
because the LLC is a separate legal entity,
it's a separate being from us,
and so we can not just keep everything in one account
or co-mingle our assets or our funds
of the business and our own personal stuff.
If you're concerned about your personal liability,
or if you want to actually be able to take advantage
of that liability protection that you get with an LLC,
then having a separate account
for your business is an absolute must.
And that's another reason why you shouldn't just
have a separate personal account
that you use for your business.
Again, separating assets.
What belongs to the company belongs to the company.
What belongs to you belongs to you.
So if you as an individual are the owner of this account,
which you would be if it was a personal account,
then you are now the owner
of what should be the business's account.
It should not be you owning that account.
It should be the LLC, the corporation.
Your company should be the name on the account.
Of course, you, as the member or manager,
are an authorized signer,
you'll have all the access that you need,
but it's not your account to have.
It's the business's account.
So we've got that part out of the way, I hope.
Now that we know not only why we should,
but really, really need separate accounts,
a separate business checking account,
what are some things that you should be looking for
when you're opening a checking account for your business?
What do we wanna avoid?
What are some great things that we can get out of this?
First, of course, we wanna talk about fees.
A lot of banks are gonna charge monthly fees
or require some kind of minimum balance
in order to get those fees waived.
If at all possible, we want to avoid that.
We also wanna know how convenient,
how easy is it for me to access my account,
get support regarding my account?
We also wanna look for something
that's gonna help us stay organized,
keep things in track.
Most traditional business banking options
are gonna have one multipurpose account
that you use for everything.
Maybe you'll have a few different accounts
like a savings account or a tax account,
something where you put money away for certain purposes,
but again, those are typically gonna come with fees,
'cause we've got more accounts. Equals more fees.
This creates a headache when we're trying to keep track
of expenses, income, saving for large expenditures,
saving for taxes, putting money away for payroll,
and knowing exactly what's happening
with your business's finances.
Sometimes we get kind of unclear or vague data
on what's happening in our account.
You see a transaction on your statement,
and it's not obvious what that is.
"What was that for?
"Was this a fraudulent charge or something,"
"or was this actually...
"I actually spent money on?"
Often, it's difficult to see
from your bank statements, or even your transactions online,
what was this thing exactly?
Collaborating with others regarding your accounts
can sometimes be kind of a bit of a pain as well.
If you're working with a bookkeeper,
or if you have other people involved in your business,
or an accountant or a CPA who's helping,
are you gonna have to be sharing
your passwords with all these people,
giving them full, unfettered access to your accounts?
You might have to do that.
And I don't wanna do that.
I don't want people to just have complete access
to my business account.
That's crazy.
And when it comes to accounts payable,
like paying bills for your business,
a lot of traditional banking options
are just not as convenient or easy as they should be.
Usually we can only pay one bill at a time online
if we're using online bill pay,
and there's usually no function or no way
to set up any kind of approval system
or review system for, when is this bill approved?
When can this be paid?
So we might use a separate third party tool
to keep track of accounts payable,
and of course, that then increases our fees, our expenses,
adds more things that we're spending money on.
And all of that is exactly why I think Relay
is such a fantastic option for small businesses.
First off, no fees.
No monthly fees, no minimum account requirements,
and no overdraft fees.
Relay gives you digital first business banking and support.
You can open your account, issue debit cards,
send and receive payments, all online.
No need to go into an actual bank.
And Relay's friendly and knowledgeable customer support team
is available by email and chat when you need them.
Hands down, my favorite feature
that you get from Relay is the ability to set up
up to 20 separate checking accounts.
Not just like separate envelopes that you might see
with other online platforms or online banking options.
Up to 20 actual separate checking accounts from Relay.
And again, all no fee and all with the same benefits
and functions that you would still get from Relay.
So you can have one account for your income,
where all the money goes into one account for your expenses,
or separate accounts for different types of expenses.
You can have an account to save for taxes.
You can have an account to save for growth.
You can have an account to save for payroll.
You can have, really, accounts for anything,
up to 20 separate accounts.
Relay gives you leveled up financial acuity.
Relay's money management and account data features
gives you so much more insight
into what's happening in your business.
And they offer best in class software integrations,
so you can have your accounts talking
to your separate bookkeeping or accounting program.
And Relay has created business banking built for teams.
You can issue separate MasterCard debit cards
to any of your team members.
You can set spending limits for each of those cards
and see detailed data for what the transactions are
from each team member who has their own separate card.
Team members can also get their own
role-based access to your Relay accounts.
And finally, Relay's really gonna help you
with streamlining your bookkeeping and outside access
from bookkeepers, accountants, CPAs, financial advisors
by setting up those special role-based logins.
So you don't have to share your login information,
you don't have to worry if you're giving
too much access to somebody else.
You can provide secure, role-based access to your accounts
for purposes of paying bills, downloading transactions,
managing money or the cards,
and accessing banking data and statements.
I'm telling you guys, literally the only reason
I don't use Relay myself is because as a lawyer,
if we take retainer advance payments,
we have to have these special lawyer trust accounts
that like the state kind of keeps an eye on,
because it's not really our money
until we've actually earned it.
We have to keep our client funds in separate trust accounts,
and these trust accounts are usually only available
through bigger banks and credit unions and stuff.
And I like to have my normal accounts
connected to my trust accounts
so I can easily move money back and forth.
If it wasn't for that,
I would absolutely be using Relay myself.
If for nothing else, just for those separate...
20 separate actual accounts, being able to compartmentalize
and put money aside for whenever you need it.
But I'll tell you, as soon as I hear that Relay
has started offering IOLTA or trust accounts,
making those available, I will be there in a heartbeat.
And so now we know why you should have
a separate business checking account,
why you absolutely need
a separate business checking account,
and why Relay is probably the very best option
that you can get out of your business checking account.
And remember, you can get 50 bucks
credited into your new account through Relay
if you use my affiliate link down in the description.
And of course, I will love you for it.
That's all for this episode, folks.
If you learned a thing or two,
go ahead and gimme a thumbs up, and be sure to subscribe
if you haven't already done so, and hit that little bell
so you get notified anytime I post a new video.
And again, don't forget to check the description
for links to additional information and resources,
including that link to get 50 bucks
credited into your new account through Relay.
Thank you all so much for watching.
I'm Aiden Durham, and I'll see you next time.
(bright music)