Opening a bank account
Whether you open a business account at a traditional bank, credit union, or online bank, there are several things you should consider:
- Check Fees - Even when paying yourself, an employee, or a contractor
- Transfers - Is it possible to make instant transfers, or are there costs or amount limits?
- Minimum Balance Requirement - Is there one? If so, is it an average balance or actual balance?
- How daily balances work:
- Let's say your minimum daily balance required is $3000. You have $5000 in your account for a month, except one day, your balance is $1000, and the next day back up to $5000.
- Average Balance: Your average balance for the month is $4867, so you meet the average daily requirements.
- Actual Balance: Because your bank account fell below $3000 for one day, you do not meet the daily minimum requirements.
- Banks and non-federally legal businesses
- Many banks have a policy to not accept funds from any business that is not federally legal, even if it is state legal, such as cannabis. Some banks will not permit their clients to deposit payments from those types of businesses. Many have closed accounts for customers who receive compensation for any work with non-federally legal companies. That can also apply to taking payment from someone who works for a non-federally legal company. If they work for such a company, their salary has not been earned through federally legal ways. You will not get into legal trouble, but your bank may terminate your account. Not only your business account but all your accounts with them. They may bar you from being a future customer.
- Why? Banks are federally regulated and must adhere to federal legislation. If it is not federally legal, a bank cannot be involved.
- Bank Fees - Make sure you know what fees you are agreeing to, including:
- Bank Cards
- Transferring Funds
- Non-Sufficient Funds
- Merchant Transactions
- Set up a merchant account - Understand how the account works for various payment methods:
- Cash
- Stripe
- Square
- PayPal
- Venmo
- Check
- Auto withdrawals
- Etc.
