Breaking down the process into small individual tasks
The small tasks involved in starting a new business can often times add up to become a seemingly overwhelming process when looked at in their entirety. It is important to remember that most of these tasks really are small, and looking at them as such makes things seem a lot easier. In this article I will focus on what I looked at in my situation in order to setup my business banking accounts.
Prior to setting up my banking accounts
To get to this point I had to complete a series of other small tasks in order to have everything ready for setting up my business banking accounts. This included setting up my business address, completing my limited liability company paperwork and receiving my LLC paperwork back from my state’s secretary of state office, and applying for and receiving my Federal Employer Identification Number from the IRS.
Since at this point in my business creation I do not have any real income being generated, I needed to keep all my initial expenses as low as possible. In this case it means finding a business banking structure that will not have excessive fees and preferably have no fees at all. The last thing I want right now is to spend money setting up my business on things like recurring unnecessary banking fees.
What I needed in a business banking account
I started out with a little research using the internet on what was required to setup business banking accounts. There is quite a lot of information available which can be easily found, so I will just document my steps in the decisions I made for my particular setup. There were a few things besides low monthly fees that I wanted from by business banking account.
1. A local convenient branch location
2. A national chain with many locations
3. A good on-line banking service
4. The ability to add on a multitude of business services down the road
5. Low or no recurring monthly business banking service charges
A convenient branch location
The good news is that I was able to find all of these things in my community. I needed a local convenient branch location because I do not want to have to travel all over the place to perform my banking tasks. This is a matter of time-management for me, and in the past I have chosen poorly with personal bank accounts because I thought I would do most everything on-line and not really need something close or more convenient. While I do perform most of my personal banking on-line, I still find myself wishing I had chosen a closer bank when there are times I needed to physically go to the bank. Depending on the types of deposits I will need to make, I envision myself needing to physically go to my business bank in the future much more than I need to for my personal banking needs.
A national chain with many locations
I wanted to choose a national bank with many branch offices because if I decide to personally relocate or setup a business in another location, the chances of having a local branch of the same bank is much more likely with a larger national financial institution. This would mean I would be able to keep the existing accounts with the same bank and not have the hassle of starting over with new accounts at a different bank in order to maintain the same convenience of having a close branch location.
A good on-line banking service
Having a very good on-line banking service is definitely one of the major considerations I had in choosing my bank. In today’s day and age, I want and expect very good on-line banking services including on-line bill pay, statements, account funding transfers, consolidation of all accounts into a centralized site for easy viewing, and most importantly built in functionality to download my accounts easily into financial software such as Quicken or Quickbooks.
The ability to add on a multitude of business services down the road
The ability to add additional business banking services or having a business bank which is easily scalable was also a consideration I had concerning the bank I would choose. This is an area which was not the highest priority at this time because I figured that if the bank I chose met the other qualifications then they would also have the ability to easily scale my business accounts to meet the needs of my business down the road. Merchant services and other business financial services would be some of the things I envision needing in the future.
Low or no recurring monthly business banking service charges
Last on my list would be one of the most important considerations I was having at this point early in my business setup. Low or no recurring monthly business banking service charges with the need to only maintain a low balance in my business banking accounts is a must at this time. I would not be opening my accounts with a lot of money, and I did not want what money I was depositing into my accounts to be eaten away at by service fees. I needed an account that would allow me to have a low minimum balance at the same time avoiding as many fees as I could. Many banks have accounts with no minimum balance requirements and no monthly fees for personal banking accounts, but this is usually not the case with many business banking accounts.
So how did I do?
I ended up opening a business banking account with Chase Bank. They had a convenient branch location close to my home and right across the street from my business UPS Store mailbox, which incidentally is my official business address at this point (See my article on Getting My Business Address.) They met my listed criteria for convenience, and also are a well recognized national financial institution with many branch offices throughout the nation. This means the likelihood of finding another branch close to me if I chose to relocate is much greater. They have a very rich on-line banking service that met all of my requirements for on-line banking abilities, and easily integrated with my Quicken software. They offered many business financial services which were available to me, but at this time I do not require them. It is nice to know I can get these services in the future with them. Most importantly, they were able to structure my accounts so that I do not have any monthly service fees or minimum balance requirements, NONE!
How did I avoid fees?
They had a program where I could open a business classic checking account which would normally have fees unless I maintained an account balance that was more than I would have been maintaining. I could avoid the fees by applying for a business credit card account and linking it to my business checking account. As long as I made at least one transaction a month on the business credit card account then I would not have any business checking account fees. I know the question many will be asking. What about the business credit card fees? Well I made sure the business credit card did not have any annual fees or other hidden fees also. It did not. Believe me I asked many times. There were also other benefits to having a business credit card which initially I did not place as much value on. These benefits included establishing a credit rating for my business which was independent of my personal credit history. This is important because in the future, the business may one day be able to obtain loans without personal liability of the loans by me for the business. Another benefit of having a business credit card is better protection for on-line purchases and fraud when using a credit card versus using a debit card on-line.
Making sure I have at least one transaction a month on my business credit card was easy enough. I simply set-up my internet hosting provider to use my business credit card for the monthly hosting fee of the business. This ensures that even if I choose to use my checking account checks or debit card, which was also free of fees, I will always have at least one charge on the credit card to meet the bank’s requirements for waving all of my business accounts’ service charges. Not a bad deal in my opinion.
What paperwork did I need to setup my accounts?
First I have to say the customer service for setting up my business banking accounts was top notch! I just walked in to the branch office without any appointment and a representative from the business banking department met with me immediately. I made it clear from the beginning that I was small-time when it came to my business at this point. They still treated me like I was a larger business. They took the time to explain everything and answered my many questions. I was approved on the spot for a business credit card with a very nice limit. I plan to never even carry a balance on the card, but it was nice to see I qualified for a respectable line of business credit.
All I needed to set-up my accounts were my personal identification, the employer identification number I received from the IRS, the certificate of filing from the Office of the Secretary of State from my state, and my LLC operating agreement. All of these documents, except for the personal identification of course, were part of the LLC package I received when I filed for my LLC using LegalZoom.com. Everything was in order and I had everything with me to complete the task without having to make any additional trips to the bank for further documentation.
By breaking down the tasks involved in setting up a business, you can decrease the seemingly complicated event by making it merely a series of small uncomplicated steps. In this step of setting up my business banking accounts, I knew what I wanted to accomplish and what I needed before I ever walked into a bank. By having my paperwork in order and by doing a little homework before hand, I was able to complete this task without it being a headache or a frustrating event.