Business Bank Account and Merchant Account

I’m looking for suggestions for a business checking account. I will be focusing on general notary work. My online research has led me to posts that have affiliate interest. They recommend online banks, like NorthOne and Novo, which may not be reliable. Some have closed.

I would like a reputable bank that offers (if possible):

  • zero monthly fees
  • offers a line of credit
  • merchant account

I may have to go with a traditional bank like Chase or Bank of America, but would prefer zero monthly fees or the lowest monthly fees.

The first place I always look for banking services is a credit union. They are owned by the members, so they only charge fees that are enough to support their operations; there are no shareholders receiving profits. Their fees are usually lower than banks.

In Vermont, when I had a business checking account, it was free except for the charge to have a supply of paper checks printed. By “merchant account” do you mean the ability to accept credit card transactions? I never explored that.

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When I had my business, I had a separate checking account with our credit union - my business name was my name, notary public - that was the name on the account and my husband was named as loss payee (in case of my death). I kept all business funds separate from personal funds. I had a small service fee with that account - not enough to lose sleep over. And it was with someone I trusted.

JMO

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In addition to the other comments, I recommend starting a single owner LLC for your business structure. Get an EIN (free from IRS) and register your business with your states SOS (may require fees). Keep in mind your local and county governments may also require a business license as well (most likely requires fees). You want to keep your personal assets separate from your business assets in case of a lawsuit. DISCLAIMER: I am not an attorney or an accountant, but it’s what I did. Also, I recommend your business account be with a different bank than your personal accounts are held with (not required). If you do utilize the same bank for both, don’t transfer between the two without business justification notes. For the most part, IRS looks at single owner LLC’s as a sole proprietor (one in the same person). But my banking mentor @donaldsonnp may chime in more.

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Thanks for the feedback, Ashton. It’s interesting that you are in Vermont. My son is in New Hampshire, which I have yet to visit.

I envisioned having a merchant account with the same bank. However, there are other payment options on the market, like Paypal, Square, and Cashapp. I would like to accept all major credit cards, including Zelle and Cashapp.

How do you accept fees for your business if not using a merchant account?

Hi Linda. Thanks for the input. Ashton and others have recommended credit unions. Are you no longer a notary?

Those are some very good pointers, some of which I have been researching. I was excited about the LLC but was advised to do it when the business can generate at least $50k per year. They said that the associated fees, the registered agent, annual report fees, etc., may be quite costly and not worth it in the beginning.

Additionally, I’m still learning and wonder if the LLC would help me build business credit. How do the banks treat business credit with an LLC vs. EIN? If I walked into the bank with my dba and EIN and have three solid months, could I apply for a loan for example? Considering other factors, of course.

I’ve retired from being a notary as a source of income, but I still do notarizations for free in connection with my justice of the peace position. I used to accept checks, electronic transfers from signing services, or cash.

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I say confidence over income on this one. If your confident in your work, then wait until you have the resources to generate the LLC. If your feeling “hazy” but have a lot of business, I recommend getting it done. It pays for itself in just a few signings. Everyone’s situation is unique of course.

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Everyone’s tax liability is different for me what made sense is doing a DBA with its own EIN. AZ does not require a business License so I did not do that.

I registered my DBA with the State and I Trade Marked my name and my business Logo. The expenses of a LLC was not something I personally felt I was willing to invest in as this was a new venture that I was entering into and I wasn’t sure on its sustainability.

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@triciamaria31 I am still a notary - just don’t do loan signings any longer

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Regarding business checking accounts: Which ones would you avoid? Based on your experience, who do you think is best overall for business?

As a former banker…and considering you are new I would start of with the basic business banking package. Lower fees

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Thank you for your expertise @donaldsonnp. Would you caution against online banks such as NorthOne and Novo? They don’t charge monthly maintenance fees, which is attractive, but I’m not sure if they are credible or ideal for business.

When doing business I would recommend that you chose a brick and mortar bank as it has its advantages. Relationships are important and can be mutually beneficial if you work them correctly

1- It will allow you to build a relationship with the staff that could possibly lead to you getting business referrals.
2- If you ever have any issues with a deposit… you have someone you can meet with in person to help you resolve them.
3- As your business grows the relationship can help with other banking products and services that could help your business.

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I don’t have a lot of experience with online banks however you may want to verify if the no fees are for personal accounts only. Banks LOVE business accounts and I don’t see how that would be free and profitable for banks.

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I agree that a credit union is likely to be the more cost effective approach. As to an LLC, it is worth having a lawyer put one together for you as you might miss something that can cost you even more money. If you are to protect your private assets, an LLC is the way to go. Just be aware that, as an LLC, you have to treat yourself as an employee so you will be filing taxes twice; once for your business and once for personal. In addition, you will need two accounts, one for operating and one for payroll. Finally, there is the E&O insurance. You will need to look at the options. I didn’t realize until recently that my individual E&O of $100,000 only protects me as an individual, not my LLC. That means I can still be sued for anything over that amount and I am responsible for the rest because the insurance doesn’t apply to my LLC. Therefore, I have been bypassing the protection the LLC offers me. I am currently pursuing coverage for my LLC with me as a covered employee. Welcome to the business side of being a notary.

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I completely agree with all of these points, @donaldsonnp. Nothing can replace the benefits of a solid relationship with your banker. I have enjoyed the perks of those relationships with my other accounts. It’s ok to try something new, but in this case, it’s best to stick to tradition. Your expertise is so appreciated.

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I did the exact same thing. I just didn’t think an LLC was worth it even tho lots of mentors in this business promote it.

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The only thing that builds business credit is borrowing money and repaying. Banks however, will look to your personal credit when you apply for a business credit card or line of credit. That’s how most new business owners start to build business credit.