Starting your own business is a lot of work, especially if you want to do it right. There is a lot of paperwork to be filed with the city, the county, and the state, and the IRS if you’re going all-in and going to brand yourself as a company instead of as a person.

You don’t want to mess around with the Internal Revenue Service. As a self-employed person you can just use your regular bank account, but in all honesty, you might want to have a separate account that all your income comes through just to keep your paperwork clean in the event you are going to apply for financing down the road. I saw “musical bank deposits” when I worked in the mortgage industry. Some people would deposit income into one account, then withdraw and deposit a different amount into another account. The same money sometimes gets counted more than once in order to boost income numbers for self-employed individuals. At least, that was it how it used to be.

I’ve always also done my own bookkeeping and taxes. It’s a lot of work, but you get to keep more money in your pocket this way. I did all my income and expense tracking using Excel. Doing our taxes every year took both of us an entire weekend. It was a huge headache and we dreaded it every year. This time around I actually have a friend who is a bookkeeper who has convinced me I am better off spending the money on QuickBooks and making my life easier. Anything to make tax time faster! I am giving it a go, and am even using an extension called Timesheets to track time spent on each job I am working on, and it syncs with QuickBooks. But that will be another blog post… 

I started my first business in 1995. Pens and Pixels formed in 1998, and eventually, I talked my regular bank into depositing checks made out to Pens and Pixels into my personal account. I carried my business license stub with me when I went into the bank and talked to the manager and they added a Note to my account, Whenever I had a check to deposit I would show my business license registration to the teller, told them to read the Note in my account, and they would deposit the funds.

 

Breaking the brick-and-mortar banking model!

I’ve always also done my own bookkeeping and taxes. It’s a lot of work, but you get to keep more money in your pocket this way. This time around I actually have a friend who is a bookkeeper who has convinced me I am better off spending the money on QuickBooks and making my life easier. Anything to make tax time easier! I am giving it a go, and am even using an extension called Timesheets to track time spent on each job I am working on, and it syncs with QuickBooks. But that will be another blog post… 

 

 

In 2013 we moved to California and that was the last year Pens and Pixels operated. Until now. Hello, 2017! With the reboot of my business almost two decades after I first started it, a lot has changed. There’s more paperwork, more requirements, and I am determined to make things easier for myself this time around. You need to be thorough in meeting your local requirements when opening your business, and different kinds of businesses have different requirements.

In Los Angeles county, I need:

  • Business license with the CITY
  • Fictitious Name registration with the COUNTY
  • Partnership Registration with the STATE (not going sole proprietorship this time, adding my husband)
  • EIN filing with the IRS (called SS-4, and that’s instantaneous online)

BRANDING of my business, as more than just myself, is important, especially in this day and age of social media. I want people to learn who we are, think of us when they need help, and to be able to pay Pens and Pixels, not just Wendy or Stephen.

If you’re an online business, it makes sense you would also trust online banking.

Now as for a bank…since I’ve started a remote Virtual Assistance business and am working for people solely over the internet or phone, it seems to me that an exclusively ONLINE BANK might be the answer. After all, I should support the business model I am also promoting, right?

I heard of Ally Bank a long time ago, so I got onto Chat with a rep there after filling out almost everything needed to open an account. Turns out they only allow personal bank accounts, nothing for businesses. Seems silly to me. So I kept hunting. Thanks to NerdWallet blog, someone else has already done most of the work for me! Especially since I think banking fees are a terrible way to spend money. They have a post from September 21, 2016, called Find a Free Business Checking Account. There are two online banks listed at the top, and then banks listed by state below it, which are the “brick and mortar” banks.

BofI Federal Bank ($1000 min to open), and EverBank ($1500 min to open) are the only online banks listed. I like the idea of less money needed to open an account so I called BofI. I talked to a really nice lady there named Amanda and she listened to what my situation is and what I am looking for. There are two checking accounts, a free one that requires $1000 to open but has no minimum (I can withdraw my money again after the account has been established), and an interest-bearing checking account (0.80% quoted today) that only takes $100 to open but there is a $10 monthly fee if the account balance is below $5000. They also have saving accounts. I can always convert to the interest bearing account once the balance gets high enough. So we set a plan (I need my Partnership reg from the state, and my Fictitious Business Name reg, and an EIN from the IRS, which is issued instantly online, first), and then at the end of the call I remembered to ask, What does the I stand for? BofI is Bank of Internet (I should have known)!

Always do your research! And don’t be lazy. It’s usually faster to just pick up the phone and have a conversation with a person rather than doing an online chat when shopping for something as varied as banking services. Online banks have customer service 24/7/365 – likely employing services from a foreign country to cover phones for overnight hours, but that’s a conversation for the next time I talk to them. And a different blog post!

Banking for the Self-Employed
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