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    1. FloridaDanny is offline

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      #1

      Do I need a business or personal USA bank account?

      Before I start selling, I know that I should open a new bank account. I understand that keeping my business funds separate from my personal funds is important.

      Since a business account tends to cost more than a personal account, would it be possible to open a personal account for my business? Is that illegal?

      Which is better for a seller to use - a business or personal bank account?
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      Hill_green is offline

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      #2
      Businesses have to use business bank accounts.

      The business account fees are going to be higher than a personal checking account, but a business account offers more legal protection and tax advantages; the extra expense, in most cases is, negligible.

      Personal accounts are cheaper but do not provide the same accurate records. Meaning the IRS cannot distinguish between two personal accounts as to which one is for business. Also keep in mind that with personal accounts, there is a limit to how much you can transfer, withdraw, etc. With a business account, that limit is lifted.
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    3. MajorLazer is offline

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      #3
      Sole traders sometimes use personal accounts. While personal accounts aren’t the same standard as business banking accounts, they work if you’re a sole proprietor just starting out.

    4. RogerRabbit000 is offline

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      #4
      Don’t get caught by your bank not using a business account. Banks specify rules to choosing a business account vs personal.

    5. FloridaDanny is offline

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      #5
      Thanks for the advice everybody. What happens if a bank discovers you are using a personal bank account instead of a business account?

    6. RogerRabbit000 is offline

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      #6
      A bank can suspend a personal account if it is being used as a business banking account. Talk to different banks, read up on Bank of America, Wells Fargo…and more. Also, banks will sometimes automatically switch you over to a business account after giving you warning.

    7. FloridaDanny is offline

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      #7
      What if I used two different banks for the accounts? Would I still be penalized?

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      #8
      The bank can review your history and if you are operating a personal bank account like a business bank account then that raises a red flag. Believe me, just because you’re 1 account holder in a million doesn’t mean you’ll fall under their detection forever. Your bank will eventually figure out what you’re doing.

    9. FaderMagFan is offline

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      #9
      There’s really no such thing as free checking anymore anyway unless you’re a student, so you might as well just deal with the business fees.

      At least then you know that the account will be recognized as a business when you are using it for tax deductions.

    10. Bonnie704 is offline

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      #10
      Banks want traders to use business accounts because they get to collect higher fees.

      There is nothing saying you have to use a business banking account unless you are a limited company or incorporated.

      Sole traders and partnerships can use a personal account. Just make sure it is just for business.

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