Archives for March 2007

Aside from getting all of your paperwork filed properly, choosing the best checking account for your small business is probably the most important decision you’ll have to make in the beginning stages of your business.

So where do you start and what should you look for?  I’ve put together a list of items I looked at before I finally settled on my business’ checking account.  While this certainly isn’t a very intensive list, it should be enough to help get you going down the right path.

Features:  I think it goes without saying, but there are a wide range of features for business banking accounts.  Some of them aren’t going to be important to you, but some of them are going to be make or break deals.  Make sure you do a good job looking at a bunch of different accounts from several different banks in order to determine what’s available to you.

For example, after doing a bunch of research, I determined that I wanted a bank account that gave me a Visa debit card, gave me at least 100 free transactions per month, had free online banking and bill pay and would allow me to apply for a small business credit card.  Thankfully, because of all the options available to me, I was able to find my perfect account. 

Initial/Minimum Balance:  For most of us who run small businesses, we tend to do so while keeping our regular 9 to 5 jobs.  Sure we hope that one day our small business will take off and replace our regular income, but in the meantime, things are probably going to be pretty low key.

That also probably means that we don’t want to have to sink a whole lot of money into the business right away, especially if we don’t have a lot of discretionary income to begin with.  That being said, make sure you take the required minimum balance into account when deciding on who you’re going to do your banking with.

When I was researching different banking accounts I saw a wide variety of required minimum balances – ranging from $0 to $5,000 or more.  And on top of that, the there was also a wide range of monthly penalties for dropping below the minimum balance – ranging from $5 to $25 per month.

Convenience:  This should pretty much be a no brainer – you’re going to want to bank somewhere that is easy for you to get to.  That way, if you ever need money or need to talk to one of the account reps, you don’t have to make a special trip that’s out of your way.

And you don’t have to resign yourself to one of those national banks in order to make sure your banking is going to be convenient.  Considering most small businesses aren’t unleashed on a national scale, you can probably get away with using a smaller local bank if it fits your other needs.

Room to Grow:  As I stated earlier, many of us run our small businesses as side projects with the hope that they will grow into something bigger.  Well, what happens if they do?  Will your bank have other accounts available to you that will cover your new needs?

Granted, you can always switch banks, but I think it’s nice to be able to stay with the bank that helped you grow up as a businesses and where you’ve developed banking relationships.

I know that this isn’t the be-all-end-all of business banking check lists, but I think it should be enough to get you started.  As someone who recently opened his very first business checking account, I can tell you that you have to make sure you do plenty of research before you finally settle on an account.

That being said, don’t beat yourself to death over it.  Figure out what you need, what you’d like to have (but might not be deal breakers) and then go from there.

First off, please let me make a disclaimer that I am neither a lawyer nor an accountant, and the following article is meant as a general guideline for starting a business.  If you are serious about starting your own business (and I hope that you are) I strongly advise you to speak to both an attorney and an accountant that specialize in business before you get too far.

That being said, starting a business really isn’t that painful of a process – or at least it wasn’t for me.  I am currently the proud owner of Carr Online Media, LLC and co-owner of Shirley Online Media, LLC.   While the process of putting together these businesses has been relatively tedious – you’ll notice there’s a lot of paperwork to be filed in order for you to start your own business – I still, to use a cliche, wouldn’t trade the experience for anything.  Well… I’m sure I could figure out a price.

Anyway, what I wanted to do in this post was outline the steps that I took in order to get my businesses up and running.  I figured that it would probably be a good starting point for people who have been kicking around the idea of starting their own business, but really have no idea where to begin.

Corporate Structure:

When I put together my businesses, from the beginning I was fairly certain I was going to go with a Limited Liability Company (LLC).  This is because I liked the flexibility of the LLC – the fact that it’s taxed like a sole proprietorship or partnership (meaning no double taxation), you don’t need to have annual shareholder meetings, they’re relatively easy to dissolve – as well as the protection it provides – as long as I stay current with my paperwork and don’t make any heinous mistakes, none of my personal assets will be liable.

Anyway, you can choose from several different structures: sole propreitor, partnership, limited partnership, LLC, and Corporation (C-Corp or S-Corp).  Each has their benefits and disadvantages; it just so happened that an LLC best fit what I wanted my businesses to become.

Filing the Corporation’s Paperwork:

Now that I had selected what my businesses’ structures, I needed to make everything ok with my state.  So, I called the State Corporation Commission in order to check and make sure the two names that I wanted for my businesses – Carr Online Media, LLC and Shirley Online Media, LLC – were both available.  Thankfully they were, so once that was squared away, I was able to go ahead and start filling out my paperwork.

Depending on where you live and the corporate structure you choose, there will be varying amounts of paperwork.  Luckily for me, all I had to do was fill out one simple form for each business, giving the desired business name, my name and address and a $100 check for each business.  Simple enough.

After filling out the forms I went ahead and sent them to the State Corporation Commission and about a week later I received documentation that everything was accepted and I was registered with the state.  I actually have the documents framed and they hang on either side of my college diploma.  How cute.

Federal ID Number:

After getting the OK from the State Corporation Commission, I was free to go ahead and apply for Federal ID Numbers, which is the number I will use when reporting my companies’ tax figures.

There were two things in particular that I liked about getting my Federal ID number- 1) it was probably the only free thing I was able to get when putting together the businesses and 2) I did it online at the IRS’ website.

After I filled out the applicable forms, about a week later I received the official documentation in the mail.  Turns out the IRS actually can work quickly.  Thanks to that little quip I’m probably now on their audit list.

Local Licenses:

Now that I had the two big things out of the way, I was able to go ahead and finalize all of my local paperwork.  This consisted of applying for my local business licenses, applying for a license to conduct business out of my home (which wasn’t an issue because everything I do is online) and, finally, a list of assets owned by the businesses.  This last one was easy because I have yet to buy anything for the businesses.  Wait, I mean, the businesses has yet to buy anything for themselves. 

Gotta make sure you keep personal money separate from business money.

Bank Accounts:

The final step I took when starting my businesses was to go ahead and open business checking accounts.

In most cases, you will need to provide the following items when opening a business banking account: state registration, Federal ID number and your business license(s).

There are literally hundreds of business banking options out there, so depending on the type of business you plan to run, you’re bound to find something that fits your needs.

I ended up going with Free Business Checking from BB&T because it allows me 150 monthly transactions before they charge me fees (I won’t exceed that, at least not initially), there’s no account minimum and I get a Visa Business Check Card.  Those were the three things that were important to me, and they were the one bank that had them.

Like I said in the beginning, this certainly isn’t the be-all-end-all of how to start a business.  I’m sure I left plenty of holes, so make sure you talk to a lawyer and an accountant before you begin the process of starting your own business. 

That being said, if you’ve got the desire to own your own business, don’t let anything hold you back.  It certainly is a very rewarding experience.