Questions about bank account for house-hack

[Erin Glosson]

Hi there, I'm brand-new to all of this! I have what will be my first house under contract, set to close in a few weeks! I've been reading Heather and Brandon Turner's The Book on Managing Rental Property. In the book they say that starting an LLC is not really necessary, but then go on to say that it's best to open up a business bank account for your property. I'm confused. Is it possible to get a business account without an LLC? I don't really want an LLC if I don't need one. What is the benefit to having a business account versus a separate personal account for the property? Thanks!

[Michelle Gerac]

@Erin Glosson Congratulations on your first house!!!

I had a business account when I first started out, but switched to using my local credit union because I don't have monthly fees on that account. For my situation, what's most important is having a separate account (business or not) so I can clearly track which expenses are personal, and which are business related, for tax time. 

One thing I keep in mind is I'm not building a credit history, or a relationship with a larger bank by choosing to use my local credit union, and depending on your long-term goals, it may be important for you to build that network by using a business account. 

If you decide to move forward with a business account, you could maybe call a few banks and see what their requirements are. I just pulled out my paperwork from several years ago when I opened my business account, and I did have to state that I was a Limited Liability Co on the form, but I don't know if that's a requirement or not. 

Good luck on your first property!