Nerdwallet: Why do I need to keep my personal and business checking accounts separate?

With a business account, you’ll deposit checks made out to your company in your business checking, not your personal checking account. Likewise, you’ll pay business expenses out of the business account.

Having commingled accounts may put your personal assets at risk in a lawsuit.

Having separate accounts and separate record-keeping makes it easier to deduct business expenses for taxes. It also better protects you if legal action is taken against your company. Having commingled accounts may put your personal assets at risk in a lawsuit.

How do business checking accounts vary?


Many business checking accounts limit the amount of cash that businesses can deposit for free each billing cycle, sometimes as little as $3,000. For deposits above that, banks often charge a cash handling fee, sometimes around 30 cents for each additional $100. If your business deals mostly in cash, such as a restaurant or a venue that charges cash admission, look for accounts with higher cash deposit limits.

You might have to pay to deposit more the $3,000 in cash each month or make a larger-than-normal number of transactions.


In addition to limiting cash deposits, banks often limit account holders’ monthly free transactions. These usually include paid checks, teller deposits, ATM deposits and electronic financial transactions. If you go beyond the monthly limit, you’ll generally have to pay for each additional transaction. Some banks charge around 40 cents per transaction after you pass 200 transactions per month.


This type of account is for businesses that process a much higher volume of transactions and keep a high balance. The bank evaluates your business’s individual needs and applies an earnings credit rate, or ECR, based on the account balance and the level of account activity, which offsets some of the bank’s fees. Eligibility varies by bank. For example, Bank of America offers Full Analysis Business Checking to small businesses that maintain minimum balances of $60,000 and, within a month, write more than 150 checks and deposit more than 200 checks.

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