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Good bank account for a startup?
32 points by forgotmypasswd on Sept 27, 2009 | hide | past | web | favorite | 26 comments
Does anyone know a good bank to have a business account with? I have a some websites that pay for themselves with ad revenue, but they don't make a lot of money. Currently they are attached to my personal account, but I would prefer to have them in a separate account with my LLC's name on it.

I had a business account with Bank of America, but they charged me $13/month for having too low a balance.

I spent a lot of time researching this and chose the HSBC Business Direct account: http://www.us.hsbc.com/1/2/3/business/checking/direct-checki...

For savings, ING has a new business savings account that I'm looking at: http://business.ingdirect.com/products/ofb_savings.asp?s=Sav...

Hope it helps!

Wells Fargo is the best for merchant services (next day deposit) and also have a great service stack for things like payroll. I had a company that used them for both and they were great. We also had a savings account with a regional bank (WCB). The small guys work harder for your business and will pay a better % (even in liquid accounts) and you may need the relationship someday for a line of credit.

I live in PA. I have a DE registered LLC.

You don't mention the number of transactions you do per month or your typical account balance. These will determine which business checking product you need.

I went with PNC Bank's Free Business Checking. http://tr.im/pncbizcheck

- No monthly fee - No minimum balance - Max free transactions: 200/month - Max free cash deposit: $5,000/month

Here is why I chose PNC:

1: PNC Business Checking has RemoteDeposit: A scanner that you can use to scan checks at home and deposit online yourself. (Optional: extra service fee of $50/month)

2: The application over the phone was painless, took 5 minutes, then 15 minutes at my local PNC branch. Walked out with working bank account and starter checks.

3: Good Merchant services for when you want to accept credit cards online

4: 800+ locations/branches (Eastern USA mainly)

So far (two months in) PNC gets 5/5 from me.

EDIT: added optional

I'm in a similar situation and I just wanted to share the little hangup I ran into:

I have a Delaware LLC and I live in California. When I tried applying for a Wells Fargo account in California they said I need a Foreign Qualification, which also means I would have to pay the California minimum franchise tax of $800/year.

I'm sure there's an easy way around this but I just set it aside because it's not a priority for me.

I have two entities at the moment, both Georgia LLCs.

Here is some of the rational for why and what I feel this buys me. This, unfortunately does not tell the OP which bank offers a small biz account for less than $13/month but does relate to "what you should be thinking about" instead of what "color-of-the-bike-shed decision" as patio11 points out.

1 - I'm not looking for investment and don't need to worry about having a corp structure suited to investors. If that later changes, I'll get hit with some restructuring costs, but I think I've minimize those costs (thats a discussion for a different post). So an LLC will do and Delaware not required for investment structure purposes.

2 - Delaware is well regarded, aside from investor issues noted above, as its court system is "predictable and efficient" for many types of business litigation. Thats a good reason to choose it, right? I'd say not good enough for an unfunded startup not anticipating investment. Choosing Delaware for it being predictable and efficient in litigation assumes you may one day find yourself in litigation. Have you ever been in litigation? I have. The first thing I learned is you want home court advantage (the second thing I learned is everyone lies, but thats a different discussion). For litigation you want your home town lawyer that you can drive down the street and talk to, not a faceless law firm in a state where you don't live. And in the worst case that you have to do some/all of the legal work yourself, you want to be able to drive down the street and file papers on your own. You can't guarantee jurisdiction being in your favor simply by being incorporated where you live but its a big factor.

3 - Income Tax. One way or another, you will get taxed when you take money out of your entity. There are various strategies to minimize this and its timing, but unless you're a resident of Texas or Florida (are there others?), you are on the hook for taxes in your state of residence.

The above tells me:

A - I should form my LLC in Georgia.

B - open my bank accounts in Georgia

C - ensure all my contracts with my clients unambiguously state the legal jurisdiction is in my home town in Georgia.

This buys me a lot of simplicity and peace of mind. For banking, I do get less than $13 a month, mine is free with a balance of over $300. My bank is a small solid old local bank that you all have never heard of and no, you probably don't want to use them if you don't live here. They always answer the phone within two rings and its always a real person. Most of the time, the conversation starts off with something like "Hi Jon, are you calling from China? I just saw your momma yesterday." ;)

IANAA: I think you owe that $800 to California if you're operating any business inside California, regardless of whether it's registered in California or not.

If I'm running a website and I just happen to live in California, does that count as operating a business in California?

Probably -- you're the owner and only employee, and you're in California.

> I'm sure there's an easy way around this but I just set it aside because it's not a priority for me.

What part of your experience/knowledge with govts, particularly CA's, suggests that "get around" will be easy?

CA will go after you if you earn options/start a company in CA, move out, and then sell.

More information on this please? That's exactly what I'm planning to do.

All states with income tax believe that income earned in their state is taxable in their state.

CA happens to be rather agressive about it. FWIW, that's why professional athletes end up paying CA taxes. (Interesting question - suppose that your team plays a game in CA but you don't. Do you owe? Does the answer depend on whether you could have played? I heard about a lawsuit arguing about whether practice time, presumably out of state, counted in the apportionment.)

NY is also rather aggressive. I heard of a lawsuit involving an out of state employee who got dinged for visiting corporate headquarters.

I don't recall how the lawsuit (that I know about - there were probably others) over "move out then sell" wrt CA ended. Your tax attorney should.

And no, you shouldn't rely on tax information that you get on HN. Even if I get all the details right, you have no way to know what applies to your situation.

This is a standard problem, not just in CA. Assuming you don't need CA qualification, which is something for your lawyer not your bank to figure out, give them a letter stating that you have no employees in the state and as such don't require CA qualification. That and some persistence should get you what you want.

Getting hit with low balance fees and caring about $13 a month both suggest to me that this is a color-of-the-bike-shed decision until you get bigger.

This is mostly a hobby business that I want to run lean without much plan for growth. I'm looking for more efficient business accounts that better match my uses.

A hobby business is not a business, it's a hobby and hobbies cost money.

If you plan on this being a business you have to figure out first how much turnover you have to make to make a go of it, and if $13 / month for a bank is a make-or-break decision then I would suggest you look long and hard at whether or not this is a feasible endeavor.

For sure it is possible that you'll be doing this expense out-of-pocket for a while, but then you just put all these expenses against your future revenues.

A typical small business, including all overhead, such as administration, tax filings, equipment and so on will cost you at least $200 / month, so if your projected profits when this thing is up and running are lower than that you really should reconsider your plans.

This is not meant to demoralize you, I just think that if you doubt about spending $13/month that you have other issues than choosing the right bank.

I chose mine for reliability, easy access to international banking, the fact that my balance is insured to a serious amount and so on, the 'costs per transaction' and 'monthly fees' were the least of the considerations.

The recent crisis has born out the wisdom of that decision, by going with a large but cooperative bank they were hit very little by the affairs that caused their main competitor to now be mostly state property.

As with most things in life bank fees like this are more often then not are negotiable. Make an appointment with the branch manager or business specialist at your BoA branch and voice your concerns about fees like these, and how they would make it difficult for you to continue banking with them.

For anyone thinking of opening a separate account for business the first place to start would be the bank you use for your checking/savings account. Not only do you have an established relationship (if only in paper form) but the will work harder to please you if there's a chance they'd lose your non-business accounts too.

The whole thing was sketchy. They told me there wouldnt be fees, so when fees showed up, I complained and they said they would remove them. When the fees didnt go away, I asked to be refunded. They said they could only refund the last 3 months of fees since they had "no record" past that, even though I had the account for a year.

Anyway, I just didn't want to deal with them anymore so I closed the account.

Another tactic to try is asking other small/medium sized businesses who their bank is. Often if they make an introduction they'll get a referral fee, and the bank might work harder to please you if your friend is a valued client.

I use wells fargo but they hit you with similar things if your account is low. There are things you can do to get around it if you want to spend some time talking to the teller. (something about setting up a monthly automatic transfer, etc...)

I'm not recommending wells fargo or anything, but I don't think it matters that much. you are talking less than $20 a month in most cases, and with wells fargo, and I believe most banks, that includes the ability to send checks from a web interface, so I don't think it's that unreasonable.

I use Wells Fargo, Business Account. When I started the account I asked them to waive the account minimum fee and that's the only way they were going to get my business and they waived it. There have been times when I had a low account balance and they didn't charge me anything. When you are opening the account it pays to understands these charges and negotiate with them they usually listen.

Can't provide a good suggestion yet, but I'll try to make your pool of options smaller: don't go with Chase.

I've been a personal customer for 7 years and a business customer for 3. A little over a year ago I opened another business account for my startup. Last month I went to them for a line of credit (or even a credit card), and even though the branch manager attached a recommendation to my credit application, it was still denied.

Perhaps this is the case with any large bank, but the bureaucracy is endlessly frustrating. I'd go straight to a small-town credit union if we weren't planning to move the business out of state in a few months, so instead I'm negotiating with Wells Fargo.

I slipped in before the change to Chase and got a free Wamu business checking account. I use this account


No monthly fee or minimum balance, up to 250 checks per month.

Large bank and getting larger with Chase acquiring, I didn't see a similar Chase plan so I think I should be grandfathered in as they move to Chase.

This is the closest I found to a "personal account for business"

Works great for me, sounds very similar to the PNC deal also mentioned.

I use a local/regional bank. They charge no monthly fees even if you have a $0 balance. Most banks have fees on checking accounts for corporations. The bank is Amegy Bank (only serves Texas).

Find a regional credit union. They tend to give better customer service and lots of free extras for the account.

SunTrust Business Checking- No minimum, No monthly fee, I use them.

google "free small business checking"

Hopefully, there is a bank in your area among those results. If not, $156 a year is a trivial expense: just forget it and focus on building your businesses.

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