No matter how you collect money on the
Internet, there’s one thing that you always need. In order
to really succeed online, you must have a legal business.
That issue as addressed, along with many others, in my
Free EBook, "Starting Your Internet Business Right".
Since that means you’ll have a legal
business name, you must collect your payment under that
business name. Beside the fact that you need to be legal
to really succeed online, there’s another important thing
to remember. You cannot collect money from your customers’
credit cards if you don’t have a legal business name.
Credit card companies like MasterCard,
Visa, American Express and all the others will not deposit
money into a personal bank account.
So, you need a Business Bank Account.
A Business Bank Account is simple, really.
For our purposes here, it’s just like a regular old checking
account, only it’s in your Business Name. Instead of a checking
account under the name Mary Smith, you open a checking account
under your business name, like Smith Enterprises, Inc.
In order to do that, you’ll need to show
your bank that your business is legal. Remember, when you use
a Business Bank account, you’re able to accept money from
people, and write checks to people, under a name that is
not your own personal name. The bank has to be sure that
if you use a business name like Smith Enterprises, Inc.,
you really are allowed to legally use that name. So, they’ll
want to see your business paperwork, like your Corporate
Filing papers, or your Fictitious Name or DBA paperwork.
They’ll want to see your Tax ID, your Social Security
card, etc.
Don’t let all this scare you off. It’s
not hard. It’s really just like opening a regular personal
checking account, only the papers you show them are different.
Once you set up your legal business, you’ll have the papers
the bank needs in order to set this account up for you.
A Business Bank Account is how your money
flows back and forth between your business and the rest of
the world. The money coming into this account will be your
customers’ payments for the products you sell, and the money
going out of this account will be you paying your business
bills or withdrawing money for your own personal use.
So, overall, a Business Bank Account is
just like a regular personal checking account, except that
it allows you to accept money, and write checks, under your
Business name instead of your personal name.
Business Bank Accounts used to be very
hard to get. Banks would make you jump through all kinds of
hoops. Now, however, with the advent of Ecommerce, so many
people are starting home businesses that banks are making
this process easier and easier. Here’s an example of what it
takes to open a Business Bank Account at a small-town bank
near us, in Orlando, Florida.
They need to see your Articles of
Incorporation (if you have a corporation) or your Business
Name paperwork if you’ve filed a business name that’s
not incorporated.
They need your Federal Tax ID. This
is easy to register for online, and it’s free. There is
information on that in the previous Learning Module in
this course.
They need a Picture ID, like a Driver’s
License, for each person who will be signing your business checks.
They need a Social Security Card for each
person who will be signing checks.
Here in Florida, we have something called
a County Occupational License. It’s an additional business
license from our County that we have to get in order to open
a business. Where you are, you may or may not need something
like this; it depends on the rules of the State and County
you live in. In Florida, we have to show the bank this
business license as well.
Now that we know what we need to show the
bank, let’s talk about the account itself. Just like personal
checking accounts, there are certain fees and deposits
required for a Business Checking Account. Here’s how it
works at the bank I’m using as an example:
They require a minimum $100 deposit to
open the account.
There’s a $13.99 monthly fee for check
writing, which allows you to write up to 100 checks per
month. If you write more than 100 checks out of this
account in a month, it costs you 25 cents for each
additional check.
You can place up to 250 separate
deposits in the Account each month. When you’re doing
business online, and collecting credit card payments
from my customers, all the credit card money you collect
each day generally counts as ONE deposit. That’s because
of the way collecting credit card money works, and we’ll
talk about that in a few minutes. It’s enough to say that
you generally won’t make more than 60 or 70 deposits in
your account per month. If, however, you do happen to
make more than 250 separate deposits in your Business
Bank Account in a month, you pay 10 cents for each additional
deposit over that 250 deposit limit.
In this particular bank’s Business Account,
they want you to keep at least $2500 in the account, or you pay
a monthly Service Charge of $13.97. Most people just pay the
Service Charge, and don’t worry about the minimum balance
right away. Your business will build up to, and go beyond
the point where you can keep that $2500 in the account
all the time, but in the beginning, you shouldn’t worry about it.
Business Bank Accounts are different, depending
on the bank. Some banks still make you jump through hoops. If yours
does, try another bank.
Banks also try to get you to sign up for all
finds of Small Business “Packages”, including Merchant Accounts,
etc. You do not need to do that if you don’t want to. Many
times, you can get the best deal on a Business Bank Account
from one place, and the best deal on a Merchant Account
somewhere else. That’s how some banks make extra money from
you. They give you a great deal on a Business Bank Account,
and then really rake you over the coals for a Merchant Account.
You do not have to get everything in one place. Don’t let your
bank push you into using all their Small Business Services if
you can find better deals on some of those services elsewhere.
