When you run a business, you also need to manage the business’s finances. This means you will need a bank account where you can deposit checks and write checks to pay bills. For a large corporation, the choice is easy, you open a business account. However, for a small business where you are the sole proprietor, it is harder to see a difference between a personal checking account and a business checking account. If you want to use a personal checking account for your business, there are some options available to you.
As a general rule, you want to keep your personal money from mingling with your business income. Business checking accounts fill this role. They are also generally designed to meet the needs of businesses with features like unlimited check writing since businesses tend to have a greater number of transactions than a personal account. You’ll also find business benefits that can help business invest excess cash in CDs, get access to domestic wires, use stop payments and overdraft protection. The business benefits can come with costs that are generally more than similar benefits in a personal account.
Using a personal checking account for your business expenses can be an attractive choice because it will usually cost less, but you will be paying your expenses with personal checks. This may not present the type of business image you want. Nowadays, personal checks can be colorful with background characters on them. They will also have your home address, home phone and maybe even your license number. All of these things may present an image contrary to your business image. While you could list your business address and phone number, a personal account is not going to allow a business name on the account unless it is "doing business as."
Using a Personal Account for Business
The major problem you’ll run into with a personal checking account is when you try to deposit a check made out to your business name. If you are operating a business under a name other than your own, you won’t be able to deposit the business check into your account. The only way you can use a personal checking account for a business is if you and your business are one and the same (from a legal standpoint) and your business checks are made out to you personally. The only legal business entity where this happens is if you operate under your own name as a sole proprietorship.
Doing Business As
Another option that is somewhat different than above is to open a business account in your own name plus “doing business as” (sometimes written as “dba”) and then your company name. This allows you to deposit both business checks and personal checks into the account. You can then use this business account as your personal checking account and your business checking account.
Fictitious Name Certificate
To open a business account in your name, you may be required to show a fictitious name certificate, which is a document that shows the operating name of the company and the legal name. In the situation with a sole proprietorship, your own name would be the legal name while the operating name is whatever you call your company.