Is a business account worth it?

Question

I just bought my first rental property and have tenants moving in soon. I am now weighing the pros and cons of using my normal checking and savings account to manage business income and expenses or going ahead and setting up a separate account for real estate.

Has anyone had experience in either situation? Which route do you recommend?

Has anyone had experience in either situation? Which route do you recommend?

Dmitriy Fomichenko · Answer

@Jordan Harper

Congrats on the first investment! Use separate account! There are several reasons for that. Run it like a business and never commingle your business and personal expenses. Would be great to develop that habit from the very beginning.

James McCard · Answer

I will agree and say its best to use different accounts, however... If you are just starting out and good about doing your books I don't see a big issue in doing it in a personal account. I currently do it that way but as I scale will want to do things differently.

George W. · Answer

It's a good idea to keep the business and personal stuff separate. Makes the finances way more organized. Should ultimately make accounting and tracking profits easier as well.

Dan V. · Answer

@Jordan Harper Yes, I strongly recommend separate bank and/or credit card for your real estate business and process ALL transactions thru those accounts. It's easier to track transactions that way. It's easy to open a bank account, so take the time and do it right. Commingling is a no-no.

Evan Polaski · Answer

@Jordan Harper, I am third for do it.  I use Chase for my business (and personal accounts).  They have free business checking, with a minimum balance requirement.  I have one business account and one business credit card for all my properties, granted I only have 2 now, but used to have up to 9 units.

The biggest advantage to me is I tie my accounts to my Quickbooks Online account, and I can reconcile and book expenses and income very easily each month.  If you use your personal account, which a lot of people do, you can still tie it to quickbooks, but then you have to filter out all your personal transactions from your business ones when you pull in the transactions.

Ned Carey · Answer

@Jordan Harper how is the property owned? If it is in your own name, it is good practice, and you are a fool if you don't have separate accounts for your business. But not required. If you own the property in an LLC or other entity you must have  separate bank accounts.

In many states security deposits are required to be held in a separate account form other funds.

Is a business account worth it?

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