How to Setup Business Accounts

[Tristen M Walker]

How do you guys/girls setup your business bank accounts? My questions are:

Do i need an LLC for a business bank account?

Can i hold multiple security deposits in one account? the money wouldnt touch my personal accounts so i dont see how that would be seen as commingling.

Do you use an account for rent/repairs as a “tenants/cashflow” account and then another for YOUR business expenses like printer paper and business trips?

Im new, thanks for your help.

[Zach Westerfield]

@Tristen M Walker I would ask you banks about the business account question. However a sole proprietorship is a business as well, so it seems logical you may be able to open one. However, many business accounts come with additional fees, so if you don't have an LLC I would encourage you to just use a separate personal account. On the contrary, I don't think the bank will open a personal account for a business.

I keep all my accounts completely separate. This will help you out when you do form an LLC as the structure is already set up to keep it segregated.

Most states have laws on how security deposits can be held, so check there first. I know in FL it has to be non-interest bearing, so I can’t use a savings account. I open a separate checking account. I put all security deposits in one account, and note the separations through my bookkeeping. However I only use this account for security deposits, nothing else.

I also opened a separate account that I call “vacancy and repair escrow”. Every month when rent comes in i allocate a certain percentage to this account. When a repair comes up, I use this first. When I have vacancy, this account “pays” my operating account so that cash flow doesn’t stop.