If you start/have a small business, do you have to have a business bank account? by law?

Question

I am wondering if it is law or if good records into your own bank account is sufficient

Answer 1

You do not need a business bank account by law, but any sensible person would keep their business income and personal income completely separate in case they are investigated by the tax (wo)man.

Answer 2

Not a legal requirement, but a sensible one. As already said, the finances for the business should be kept conpletely seperate, also if you use your personal account for your business income the activity is unlikely to be in the 'normal' range for personal use so it could be investigated for money laundering, tax etc.

There are accounts for small businesses & some benefits to having one, such as using a business name on cheques, advice from a business manager, building a record if you want future lending for the business as it grows.

It would also keep accountants costs down as they have more work to do seperating your personal & business income & expenditure. No matter how well you keep records it is all much simpler if kept seperate.

Answer 3

As far as I know, if you keep good records for your business, your personal account is just fine.  I think that when it makes a difference is when you incorporate the business.

Answer 4

Yes and no. If you accept checks they have to be made out to you. If they are made out to your business and there is no account for it then it cannot be deposited or cashed. If they are and the IRS finds out you will be charged with tax evasion.

You can also set up a DBA (Doing Business As) account. This is basically tying your personal and business account into one. Then you can cash checks made to your business and deposit with cash back.

If you open a business account remember you cannot get cash back on deposits. You must deposit the check and to get funds out you must write a check to yourself or withdrawal it.