Establishing a Business Bank Account

Why it's important to separate your business and personal assets
Magazine Contributor
5 min read

This story appears in the July 2002 issue of Teen Startups. Subscribe »

( - Are all the best banks created equal? Definitely not. Ditto for all bank accounts. As a 'trep on the road to success, a business bank account will be an important part of your arsenal. Checks printed with your company's name look professional and tell the world you mean business. And, beyond the cosmetics, a bank account will help you manage your business's cash flow and tell you if you're right on target.or need to make some adjustments.

But, just like every other decision you make, you've got to be savvy when it comes to choosing the bank account that's right for you and your business.

Beyond the professional look that printed business checks give your business, a separate checking account for your company can serve as a valuable business management tool. A separate bank account will help you:

  • Create a dated "paper trail" of all the money that comes in and goes out of your business.
  • Keep more accurate records, since you'll be keeping your personal and business monies separate.
  • Gauge the progress your business is making, or let you know when you've stalled out and need to make some changes. You'll never know exactly where you stand with the business if you use the same bank accounts for both personal and business activity.

Dare to Compare
Picking the right kind of account means doing some thorough research upfront. Basically, you'll have a choice of opening a non-interest-bearing account, where you will not earn any interest on the money you deposit into your account, or an interest-bearing account, where you will earn interest on your balance but will usually be required to keep a minimum balance.

Before you hop in your car and begin driving from bank to bank, go to your computer. Online services like make it easy to compare banks for requirements to open accounts, service charges, transaction fees, interest rates and customer service features.

As you weigh your options, be sure you understand all the fees for bank services, such as limits on the number of checks or withdrawals you can make on a monthly basis, a required minimum balance, service charges, ATM fees and the like. That way, there won't be any surprises when your statement arrives.

And before you march in to your bank to set up an account, know that if you're under 18, some banks may require someone over the age of 18, like a parent, to cosign for your account.

Balancing Act
Good business cash-flow management means keeping the balance on your new account up-to-date. Balancing your checkbook with your statement allows you to accurately keep track of your money and the activity in your account.

By making it a habit to balance your checkbook every time you get your statement, you will always know how much money is really in your account and avoid bouncing a check (for which there is often a substantial charge). In addition, it will help you spot any unauthorized use of your ATM card or checkbook.

Think of your bank statement as a road map to the successful handling of your checking account. Follow these basic steps, and you'll be on your way to organizing your finances:

1. Check off items in your register. First, compare and check off the items listed on your statement with the items listed in your checkbook register.

2. Update your checkbook register. Record all transactions listed on your statement that you have not written in your register. These entries may include ATM transactions, service charges, and fees and deposits.

3. Use the reconciliation form. The final step in balancing your checkbook is simple arithmetic. Use the reconciliation form on the back of your statement to guide you through the steps of reconciling your account, making sure that the balance you have for your account is in agreement with what the bank says you have.

On the Lookout
Now that you've selected the bank that is just right for you, and you've worked diligently to keep your account up-to-date, you can finally relax. Or can you?

Sort of. As your business grows and changes, the type of bank account that best suits you may change, too. For example, as your cash flow increases, you may decide to change from a non-interest-bearing account to interest-bearing.

Banks change, too. Watch for changes in your account, such as added fees, that may signal it's time to consider other options.

And finally, you can breathe a sigh of relief. After all, you've taken a very important step toward managing your business.

Next Step
  • Wondering if online banking is for you? Check out the advantages and disadvantages here.
  • Shopping for a bank, but not sure exactly what questions to ask? Get the skinny at

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