# Benefits of Business Bank Acounts?



## 1BadHawk (Nov 14, 2004)

Deciding on getting a business account with one of the local banks.

Not sure I totaly understand the difference in a personal and a business account. What are the benefits generally of such an account?


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## johntwist (Feb 10, 2004)

I'm no expert but a few things come to mind right away.

If you plan on reporting your income from plowing as a legitimate business, a separate bank account is necessary to make it easier to do your record keeping. Instead of having to figure out which transactions on your statement were personal and which were business, you'll know they are all business related. This will also make it easier to do your taxes and figure your profit or loss for the year, as well as some of your deductions.

I have a separate account for my business, as well as a separate credit/debit card. I use it to purchase fuel, windshield wipers, windshield washer anti-freeze, as well as pay for vehicle maintenance and repairs, and anything else plowing related. Another GREAT thing is if your bank offers "on-line" banking, most of them are set up so you can export all your account information to Quicken or other types of accounting software, which in turn can be read by TurboTax and makes things very easy come tax time.

I also have to mention that it's not a bad place to tuck away some of your cash so your old lady won't spend it on you!


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## DJL (Oct 28, 2003)

Here is reason el' numero uno!

If you use your personal account for both business and personal then you may be considered part of your business. your probably scratching your head right now. Sounds stupid, I know.

As an example, let's say your plowing a commercial parking lot. Dear Aunt Millie slips, falls, breaks her leg, and is now suing you. Okay, judge awards Aunt Millie $2 Million bucks in damages. So, your insurance pays there $1M, cause that's what your limit is. Now, she turns around and goes after whatever assets your business has. So, with the money in your account, your equipment, etc. the business still owes Aunt Millie $500,000. Well, guess what, that's all she is getting cause the business is flat out broke.

Now, if you mixed business and personal, and I'm not just referring to banking, then Aunt Millie could try and prove you, Mr. Soandso, didn't treat your business separate. So? Well, the the courts now agree with poor ole' Aunt Millie and says she can go after your personal assets. Well, you have $100,000 in the bank. C-ya! That leaves you with $400,000 left. Now, add up your car, 401k, house, whatever.

The one reason you should have separate business and personal accounts.


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## MNplowguy (Nov 21, 2004)

*Business Account.*

It's a good idea to open a business account to better track actual business expenses, however you may only need to open another personal checking account if the checks are made payable to yourself. You only need an
actual business checking account if your having checks made payable to a business name.


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## pyrocare (Nov 1, 2001)

Having just a business account will not insulate the liability from your personal assets. 

If the business is set up as a proprietorship or partnership as soon as the business assets are all used up the liability will fall directly on to the owner(s) of the business. In this type of business the owner and the business are considered one in the same. Another way of looking at it is that the business is the super ego of the owner.

If you want to insulate yourself from the liability then the business would have to be set up as a corporation or a limited liability company (LLC or LLP). With this type of business the business is an entity of itself. It will file its own tax return and if it is sued they can only take the assets of the business.


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## all seasons (Nov 1, 2004)

to put it simply,if your in business for yourself,keep your personal and your business seperate and never mix them for all the above mentioned reasons and a whole pile more you havent even heard yet.


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## cet (Oct 2, 2004)

All good posts here. Pyrocare has it right! If you are not limited or incorporated then everything you own is on the line. To add an extra million or two to your insurance is cheap in comparrison to your policy. If a million costs you $1,000. then $2,000. might cost you $1,100. I carry 2 million and that may not be enough but that is what my customer wants. We have had 5 people try to sue us over the years which is low for 16 years but we have never paid out. There is someone always looking to make a fast buck. Contracts are good even for the driveway contract. If you do not salt or salt at your discression then get this in writing and make sure you are not liable for slip and falls. The paper boy might slip, you never know with some people.


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## jpunlimited (Aug 12, 2004)

*the main reason for me*

the main reason I opened a business account was to allow me to accept checks made out to the company. this gives people a warm fuzzy feeling making the check out to alpha plowing(example) . the other pro is that if you have employees the customer can be instructed to make it out the company. Example: I will leave the check tacked to the front door who should I make it out to...alpha plowing. that check can only be deposited into the business account.


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## DJL (Oct 28, 2003)

pyrocare said:


> Having just a business account will not insulate the liability from your personal assets.
> 
> If the business is set up as a proprietorship or partnership as soon as the business assets are all used up the liability will fall directly on to the owner(s) of the business. In this type of business the owner and the business are considered one in the same. Another way of looking at it is that the business is the super ego of the owner.
> 
> If you want to insulate yourself from the liability then the business would have to be set up as a corporation or a limited liability company (LLC or LLP). With this type of business the business is an entity of itself. It will file its own tax return and if it is sued they can only take the assets of the business.


Thanks for clearing up my statement. I should have mentioned we are set up as an LLC and it is dependent upon your type of business. However, my LLC does NOT file a tax return. Rather, I attach a form (forget the number) to my personal tax return on profit and/or loss and get taxed accordingly. Our LLC does not file its own tax return. Now, we do not have any employees, so there is no payroll so maybe you are assuming that?


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## pyrocare (Nov 1, 2001)

I was wrong about the LLC and LLP filing their own tax returns. I looked in my business book and the LLC and LLP are a hybrid. They have the benefits of the corporation - little to no liability on the owner(s), but don't get the penalty of double taxation.


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## RAPID RESPONSE (Mar 9, 2006)

*General Liability Ins Policey*

Can Anyone Put The Issue To Rest About General Liability Insurance
And Does Anyone Know What Companies Will Write For Snow Removal. The Brokers In Ny Are Doing The Dance!!!!!!!!!!!
Thanks


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## THE BOSS 1975 (Nov 16, 2005)

i know american family does insure snow removal companies here in illinois but not sure in other states .try giving your local agent a call and see !


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## Makndust (Feb 6, 2004)

I carry $1,000,000 general liability (what my insurance agent calls contractors insurance), and also a $1,000,000 automotive liabilty policy. My insurance agent describes it like this. If you hit someone or something with the pickup and blade, you automotive liability covers it. If you stack snow somewhere and it melts and the water floods granny Jones'es basement, then your general liabilty covers it. HOPEFULLY. I feel that I may be a little overinsured in my area, but you can't be too carefull nowadays.


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## T-MAN (Jan 9, 2001)

I have Auto Owners for all my vehicle, gl, and an umbrella. They will be writing my comp this summer as well. Good company with fair rates. Had Travelers for comp and they were a nightmare. Now we have Hartford for comp but they wont have anything to do with snow. 
Todd


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