Whether you are a new or seasoned entrepreneur, a business bank account can help you separate your personal and business expenses for taxes. It's an easy way to organize your tax deductions, bookkeeping, leave a transparent audit trail for the IRS and separate your personal and business finances.
Sure, there are a ton of benefits to having a business checking account, but how much to open a business account?
Well, in this article, we'll break down all the costs to open a business bank account, what you'll need in order to get started and show you some free options. Let's start with the price to open a business account.
Note: If you want to open a business bank account with no hidden or monthly fees, no minimum balance requirements or credit checks, try Bonsai Cash. Our online business checking account comes with a business debit card and has an automatic savings feature to help you prepare for taxes. Open an account today.
Every bank has different requirements to open a business bank account. You'd need to compare the best business checking accounts and see which one is right for you.
There may be special deals available to you if you open a business bank account under the same bank which has your personal accounts.
Some require an opening deposit or minimum balance, and others have different fees for various types of transactions i.e. monthly service fee, excess transaction fees, cash handling fee.
We'll dive into the different types of fees you should consider when you are open a business bank account.
Generally, in order to get started, banks require an opening deposit ranges from $5 to $1,000. Others have no initial deposit and some have a monthly maintenance fee. A monthly fee is charged by banks to cover extra perks of having a business checking account such as: overdraft coverage programs, cash back on spending, and no charge for using ATMs outside the system.
Banks often require you to maintain a daily balance of $1,500 to avoid any monthly maintenance fees. The majority of basic business checking accounts will have monthly fees ranging from $10-$50. There are some with no monthly maintenance fee.
Transactions fees are charged when your business processes a customer's payment. Some banks charge business customers a fee for any transactions over a certain limit i.e. the first 25 transactions free, then 40 cents per transaction after.
Cash handling fees are charged by banks when they have to process bills and coins deposited over a certain limit.
You can deposit only a certain amount of cash at many banks. After that, you’ll be charged a fee to process all those bills and coins. Typically, the fees range from 20 cents to 30 cents above the designated limit.
Some banks have contracts with processors where if one party cancels the agreement early, will need to pay fees for the early termination. In the terms of agreement, you may sign a multi-year contract for processors set you up with a merchant services account.
Note: if you want to open a business checking account to help you organize your finances better from your personal expenses, try Bonsai Cash. We have zero minimum balance requirements, no monthly maintenance fees or hidden fees and allow you to instantly create as many sub accounts as you'll need. Try an account today.
The requirements to open business accounts differ from a normal personal banking or savings account. We'll quickly review the things you'll need in order to meet the business bank account requirements to open an account.
Let's list some of the other requirements you'll need to open business bank accounts.
Read more about our best business checking accounts to open here.
Bonsai Cash is a new online business bank account to manage your finances for taxes. Bonsai is a complete online and mobile banking service.
You'll be able to accurately manage your business's budget, project cash flow as well as track income and expenses. There are no initial deposit, no minimum balance requirements to keep, no foreign transaction rates and no monthly account fees.
You'll get hooked up with a virtual and physical business debit card.
Our 'envelopes' feature allows you to create separate business accounts instantly. Envelopes are similar to sub-accounts. You'd be able to instantly make business savings accounts, vacation funds, personal funds and tax accounts.
Opening a business bank account online requires no application. Your business checking account is guaranteed and automatically approved. Mobile banking could not be made easier.
Separating personal and business accounts has a ton of benefits for your small business. Let's quickly review some reasons why you should have a business account.
We reviewed the costs associated with opening a bank account for your business as well as the benefits you'd receive. Not properly organizing your personal and business finances can lead to a headache with the IRS down the line if you are ever audited.
Compare the best bank accounts for business and carefully read through their fees to see which one is suited for your operation.
Bonsai Cash is one account to manage your business's finances. It is really easy to set up, there are no hidden fees or minimums and requires no initial cash deposits. You do not need to even apply to get approved. Just open a business bank account today. See for yourself and organize your business finances easier today.
A verbal contract (formally called an oral contract) refers to an agreement between two parties that's made —you guessed it— verbally.
Formal contracts, like those between an employee and an employer, are typically written down. However, some professional transactions take place based on verbally agreed terms.
Freelancers are a good example of this. Often, freelancers will take on projects having agreed on the terms and payment via the phone, or an email. Unfortunately, sometimes clients don't pull through on their agreements, and hardworking freelancers can find themselves out of pocket and wondering whether a legal battle is worth all the hassle.
The main differences between written and oral contracts are that the former is signed and documented, whereas the latter is solely attributed to verbal communication.
Verbal contracts are a bit of a gray area for most people unfamiliar with contract law —which is most of us, right?— due to the fact that there's no physical evidence to support the claims made by the implemented parties.
For any contract (written or verbal) to be binding, there are four major elements which need to be in place. The crucial elements of a contract are as follows:
Therefore, an oral agreement has legal validity if all of these elements are present. However, verbal contracts can be difficult to enforce in a court of law. In the next section, we take a look at how oral agreements hold up in court.
Most business professionals are wary of entering into contracts orally because they can difficult to enforce in the face of the law.
If an oral contract is brought in front of a court of law, there is increased risk of one party (or both!) lying about the initial terms of the agreement. This is problematic for the court, as there's no unbiased way to conclude the case; often, this will result in the case being disregarded. Moreover, it can be difficult to outline contract defects if it's not in writing.
That being said, there are plenty of situations where enforceable contracts do not need to be written or spoken, they're simply implied. For instance, when you buy milk from a store, you give something in exchange for something else and enter into an implied contract, in this case - money is exchanged for goods.
There are some types of contracts which must be in writing.
The Statute of Frauds is a legal statute which states that certain kinds of contracts must be executed in writing and signed by the parties involved. The Statute of Frauds has been adopted in almost all U.S states, and requires a written contract for the following purposes:
Typically, a court of law won't enforce an oral agreement in any of these circumstances under the statute. Instead, a written document is required to make the contract enforceable.
Contract law is generally doesn't favor contracts agreed upon verbally. A verbal agreement is difficult to prove, and can be used by those intent on committing fraud. For that reason, it's always best to put any agreements in writing and ensure all parties have fully understood and consented to signing.
Verbal agreements can be proven with actions in the absence of physical documentation. Any oral promise to provide the sale of goods or perform a service that you agreed to counts as a valid contract. So, when facing a court of law, what evidence can you provide to enforce a verbal agreement?
Unfortunately, without solid proof, it may be difficult to convince a court of the legality of an oral contract. Without witnesses to testify to the oral agreement taking place or other forms of evidence, oral contracts won't stand up in court. Instead, it becomes a matter of "he-said-she-said" - which legal professionals definitely don't have time for!
If you were to enter into a verbal contract, it's recommended to follow up with an email or a letter confirming the offer, the terms of the agreement , and payment conditions. The more you can document the elements of a contract, the better your chances of legally enforcing a oral contract.
Another option is to make a recording of the conversation where the agreement is verbalized. This can be used to support your claims in the absence of a written agreement. However, it's always best to gain the permission of the other involved parties before hitting record.
Fundamentally, most verbal agreements are legally valid as long as they meet all the requirements for a contract. However, if you were to go to court over one party not fulfilling the terms of the contract, proving that the interaction took place can be extremely taxing.
So, ultimately, the question is: written or verbal agreements?
Any good lawyer, contract law firm, or legal professional would advise you to make sure you formalize any professional agreement with a written agreement. Written contracts provide a secure testament to the conditions that were agreed and signed by the two parties involved. If it comes to it, a physical contract is much easier to eviden in legal circumstances.
Freelancers, in particular, should be aware of the extra security that digital contracts may provide. Many people choose to stick to executing contracts verbally because they're not sure how to write a contract, or they think writing out the contract terms is too complicated or requires expensive legal advice. However, this is no longer the case.
Today, we have a world of resources available at our fingertips. The internet is a treasure trove of invaluable information, platforms, and software that simplifies our lives. Creating, signing, and sending contracts has never been easier. What's more, you don't have to rely on a hiring a lawyer to explain all that legal jargon anymore.
There are plenty of tools available online for freelancers to use for guidance when drafting digital contracts. Tools like Bonsai provide a range of customizable, vetted contract templates for all kinds of freelance professionals. No matter what industry you're operating in, Bonsai has a professional template to offer.
A written contract makes the agreement much easier to prove the terms of the agreement in case something were to go awry. The two parties involved can rest assured that they're legal rights are protected, and the terms of the contract are sufficiently documented. Plus, it provides both parties with peace of mind to focus on the tasks at hand.
Bonsai's product suite for freelancers allows users to make contracts from scratch, or using professional templates, and sign them using an online signature maker.
With Bonsai, you can streamline and automate all of the boring back-office tasks that come with being a freelancer. From creating proposals that clients can't say no to, to sealing the deal with a professional contract - Bonsai will revolutionize the way you do business as a freelancer.
Why not secure your business today and sign up for a free trial?