If you have established your home business as a new legal entity (e.g., S-Corp, LLC, etc.), then you also need separate your business finances from your personal finances. You need to keep track of your business expenses. You also need to get set up with a separate checking and/or savings account and credit card(s).
If you’re like me, your home business is pretty small and unproven. In that case it can be a challenge to find a bank that is willing to give you a checking account or credit card. I had to do some searching to find ones that were good fits for my needs.
Checking Accounts
For a checking account I went with USBank. They are currently offering free checking with no minimum balance required and 150 transactions per month included. You also get free online banking. A few things to be aware of when setting up your account:
- With USBank you need to go into a branch office to get a new account setup
- Bring your documents that show your legal entity status and Federal Tax ID. If you aren’t sure what you need, call the bank and ask. The last thing you want to do is show up at the bank without the necessary documents.
- Give yourself plenty of time. It will take 30-45 minutes to get the account setup. It doesn’t seem like it should take that long, but the banker will want to explain things to you, make copies, etc.
- Online access may not be immediate. For USBank I need to wait about a week before I’ll gain online access to my account. This is because I need my check card in order to register online, and my check card won’t arrive in the mail for 3-5 business days. So, again I’ll say it - "give yourself plenty of time".
- Be sure to find out what the minimum opening deposit is. For USBank it is $300. Not a lot, but it didn’t say anything on the web site and when you read "no minimum balance" it is a natural assumption that you can start with as little of a deposit as you want. Turns out that was a bad assumption!
Credit Cards
Finding a good business credit card is also no trivial task. There are plenty of credit card options out there, but many of them have high interest rates or require a minimum annual business revenue or other restrictions. I did a lot of searching for credit cards and decided on one from Capital One. I was able to apply online and got an immediate response for accepted or not. The interest rate is good and it even has 0% until Feb. 2009!
The one thing I wish I had done differently is to get a checking account before looking for a credit card. The reason is that I found that USBank would give me a good deal on a credit card since I opened up a new checking account with them. It would have been nice to have all of my business finances from one place. It’s not a big deal, but something to keep in mind.
