58 comments

  1. Thanks for the information! I’m starting up my own LLC, so I need to open up a separate checking account for my business. It’s good to know that there are programs that offer special discounts for cardholders. As a startup company, I could use as many discounts on a new company account as I can get.

  2. Gabby says:

    Great info, but Ally just flagged my account as business and now they’re shutting it down. It’s completely ridiculous, but there’s not a thing I can do about it. I have my freelance income deposited into my Ally account and use it to purchase things like annual hosting fees, etc. for my website. It’s small potatoes when it comes to income, yet they’re calling it a business…

    • Carrie says:

      Good to know, Gabby. I didn’t realize that Ally would flag freelance income/expenses as a full-fledged business account. I don’t think that’s right at all, but I guess you can’t do anything about it. This is good info for anyone else who is using their Ally account for small freelance transactions.

      • Dave says:

        So Ally does not have business checking accounts? Too bad. The personal account has been perfect and saves me a lot of money and time, not to mention their support has been perfect!

    • Chris says:

      I just found out about that issue with Ally as well yesterday. I called to see if I could add my LLC and was told they don’t offer business accounts and that they would shut you down if found to be doing business transactions. Really pretty lame actually. I don’t know what is required of a bank to work with businesses but it is probably some government compliance deal. Big brother to the rescue again!

      • Kacey says:

        I used Ally in tandem with Braintree when my business was just a Sole Proprietorship. (Shhhh…don’t tell.) I’ve just formed an LLC and am now looking at internet banks for business checking. My criteria are no monthly fees or minimum balance and mobile deposits. I haven’t pulled the trigger yet, but Radius Bank is looking pretty good.

        Does anyone have any experience with them? And for personal banking, their Hybrid account looks pretty great.

        • Kacey says:

          It turns out Radius is only opening checking accounts for clients within their New England footprint (currently MA and NY). Bummer. Now looking at both US Bank Silver Business Package and Spark Business Checking, but was hoping to find a “least evil” bank like Ally.

          SmallBusinessBank (Gardner Bank) is another option I’m seriously considering.

          Note: For sole proprietors getting shut out of Ally, EverBank has a small business checking ($1500 to open, no monthly fee) for sole proprietors.

      • J Goldberg says:

        Well, had you bothered to read the user agreement before “agreeing” to it and signing on, you would’ve known their policy.

        It is illegal for then to pay interest on business holdings.

        If you’re actually in business, you really should already know this though. Next time do your due diligence before whining after the fact..

  3. Jim A says:

    While Ally has no idea if/when they’re coming out with an honest to goodness Business Checking and Savings account deal, Capital One 360 is in the testing phase of business checking accounts under the “Spark” line. I’ve been invited to be one of their testers. Only thing holding me back from making 360 my full-time biz account is the lack of integration into my GoDaddy Bookkeeping account. In the meantime, I’m using a regional bank (Huntington) for all my business accounts. A free checking account, believe it or not.

    Carrie, if you wanna know more about the 360 Biz Checking account I’m testing, I’d be happy to chat about it.

    • Kevin says:

      Jim A- I’m very curious about your Spark / 360 Biz Checking account you are testing… Any chance of sharing a few details here? Or how it would be possible for a small, high income sole-proprietorship to gain entry to this test? I’m currently a Spark business credit card user if that helps? 🙂

    • Hayley says:

      Jim, I’d love to know more about the Spark testing. I used to have all of my accounts with 360, but when I switched to an LLC and they didn’t have a business checking option, I had to go elsewhere.

    • Marie C. says:

      I just made my first transaction with Spark Pay on 9/4/15, Today is the 9th and there still has not been a deposit made into my account although it states on the home page “deposits made every night”. Also, after making my first transaction i soon received an email stating that due to my business being a “high risk business” (An apparel shop?) They will withhold 25% of each transaction for 120 days. Are you kidding me?!

      As for the Business checking? It takes 5 days for a mobile deposit to clear which is unheard of. Any other deposit takes 5 days as well.

      Capital one hasn’t been very convenient for business at all. Has anyone had a different experience?

      • Dori says:

        I just got off the phone with a representative. They said it is still in BETA testing so the IT department is still working out the kinks for deposits and it will be awhile before the system can readily push through deposits.
        I’ve had an ING account before Capital One bought it and I have been grandfathered into keeping my account because NOW, the rule is if you live in a state that has a Capital One Branch – you must open an account with the branch. You CANT open an online CapitalOne360 account. This goes for the Spark business account as well unless you live in a state that does not have any Capital One branches.

      • Donnita says:

        Marie, I realize it has been some time since this post. Are you still using Capital One and did they indeed require a 25% hold back? I’ve been reading some good reviews about the Spark account but reports like this are unsettling.

    • Rachael Witmer says:

      Hi Jim,

      This is an old post, but I’d love to find out what came the CapOne 360 business account testing. I’m opening either a DBA or an LLC and I love my 360 personal bank account.

  4. Joe says:

    Ally shut down my account because I was depositing money I made from my freelancing business in. They are very strict about this. Deposit one paypal payment there and they will shut down your account.

    • Carrie says:

      Thanks for the input, Joe and everyone else who had experience with Ally Bank. I have removed them as a recommendation and replaced it with another good alternative.

  5. Sonia says:

    So Carrie I am now looking for a business checking account without all the fees, found some but not sure which one to go with. Its just for income purposes, direct depositing and because my business is an LLC, I’m having a difficult time.

    • Carrie says:

      Sonia, have you sat down with your accountant and had a discussion about the best checking account for your needs? I’m sure they will be able to help! Otherwise you can make a checklist of what you’re looking for in a bank for your business and find the one that checks the most boxes. Good luck!

  6. Kyawt Aung says:

    Do not open your business account with CHASE. I had a customer who used CHASE quick pay for my service and later call the bank that the payment was fraudulent. My account was frozen because someone claimed that payment to my account was not correct.

    CHASE told me I have to find out the person and ask the person to go to CHASE that the payment was the correct. Is that make sense? Instead of punishing the person who did the fraudulent claim, the bank punish my business account by freezing it. I could not write checks or make payment anymore. The business is basically freeze without able to make financial transactions. Many hours of stressful phone calls without making progress just asking me to get the person who did fraudulent claim to CHASE branch. The should have been tracing down the person who did the fraudulent claim.

    My suggestions is when you open the account at CHASE, you may pleased the smiles and attention of bankers. The HELL might be waiting behind the smiles and beyond the local branches.

    • Carrie says:

      I’m sorry to hear that your experience with Chase was so poor. I’ve always had an awesome experience with them and still use them for my business and personal accounts. Sometimes things happen though, so it’s always smart to do research and beware of what’s happening.

  7. Jackie says:

    Hello Carrie.

    thank you for the info,
    I just registered my dba (am into graphics and web design)
    My question is , is it wise to use a paypal account attached to my personal account, I understand paypal needs a tax id to pen a business account. please i will need your opinion on this, Thanks

    Jackie

    • Carrie says:

      PayPal offers a Premier account and a Business account. Both of them are different and have varying fees associated with them. I simply use a Premier account with my personal name and Tax ID number.

  8. Roy says:

    Hi Carrie,
    I just contacted Discover Bank and they told me that they don’t have checking and savings for small business owners. Too bad since I was looking forward to opening with them.

    Roy

    • Carrie says:

      Yes, that’s true Roy. I use Discover for personal spending allowance that I allocate for myself each month. I like to think of it as a commission-based reward system for being self-employed. When I make a big sale or land a big client, I reward myself with a small allowance. It makes being your own boss more fun! 🙂

  9. David says:

    Thanks so much for writing this up… very helpful! I’ve also had a good experience with Chase, but I’m not so sure “every-corner” Starbucks is a great comparison. I’m moving to Massachusetts soon, which has two Chase ATMs and no Chase branches. In fact, Chase only has branches or ATMs in half of the states.

  10. Ashley says:

    Love the PayPal idea. I tried searching their site but couldn’t find it: Do they have a routing number/account number for external partners to deposit funds directly? Thanks!

    • Carrie says:

      Great question, Ashley. Yes, you can deposit funds directly from your PayPal account into an external bank, savings, or money market account. You can also request a debit card from PayPal and use your account balance that way.

  11. Amy says:

    Hi Carrie,

    I have been a banker for nine years, and am in the process of choosing a bank for the small business I am starting up. I ran across your blog when I was looking around online, and thought some clarification could maybe help everyone. For anyone with their own business, it is utmost important to have a separate account for their business income/expenditures, but it’s not generally recommended to run it through a personal account. All back office operations in banks/credit unions will look for activity that appears to be a business running through a personal account per federal regulations (just like they look for money launderers, etc.). From a personal standpoint, I really recommend going the route of LLC/Inc to help protect the individual, and to really research the laws and regulations in the state in which you are going to do business as there are some oddball items out there.
    Hope this helps anyone trying to go it on their own with a business!

    • Carrie says:

      Thanks for the clarification, Amy! I definitely agree that you should always separate your business and personal accounts and then move them to a small business checking once you’re more established. It’s even more important when you’re an LLC and make things legit!

    • Carrie says:

      You can read some of the first comments posted from other freelancers to see why Ally isn’t the best choice for a freelance business bank account. Thanks!

  12. Drew Reed says:

    I like how you said that there are different types of checking accounts for different purposes. My wife and I were looking at starting an account so we could pay our bills more easily. I’m still not sure which one to go with, but it sounds like this article will help her decide. Thanks for sharing!

  13. mary says:

    I have the chase small business account as well, but it only allows INCOMING wire transfers for international. Do you know which is the BEST for outgoing? And how to find the fees? I can’t seem to find any online. I’d love to see a compare between banks that have outgoing wire transfers for international. I Send 4-6 a month.

  14. Josh says:

    Hey Carrie – I personally have done business with PayPal (and only PayPal) for my ecommerce website for the last 12 months and I haven’t had any problems, but ever since I’ve done more research, I’ve seen a surprising amount of people say they’ve been screwed over by PayPal by freezing their accounts unfairly and keeping their money. One example I saw was from an Entrepreneur.com article that come across my Facebook news feed about a new PayPal feature and several people jumped right in and claimed PayPal is notorious for freezing accounts unfairly and keeping their money – and that everyone should avoid PayPal at all costs.

    It’s kind of worrying me and I think I’m going to try avoiding them as much as I can while still allowing it as a payment option for my website and future freelance transactions (haven’t begun website design freelancing yet, but I plan on starting soon in the future). Have you heard anything about PayPal freezing a lot of accounts?

    • Carrie says:

      I haven’t heard that about PayPal, Josh. In fact, I use my own PayPal Premier account every day and am constantly transferring funds back and forth. I’ve never had an issue with it in over 4 years.

  15. Krystal says:

    Forgive me. I am a little confused…. Could I maybe open my personal account under my DBA name or do I have to open a “real” business account.

  16. Great post. Thanks so much for putting it together. I was especially interested in Ally as a business banking option and now I know it’s a no go.

    One update for you – Paypal no longer allows for taking pictures of checks and adding the funds to an account via its app. I just got off the phone with a rep and she said that was discontinued because they were having too many problems with it. She doesn’t anticipate it returning as an option.

    Thanks again!
    Kurt

  17. April Cook says:

    I have been thinking about starting a freelance business, and this is helpful information. I didn’t realize that I would need a separate checking account for my business, but it makes sense. I like that customizing your business account will make you look more professional. how bog would you say a business needs to be before you get a business account? Thanks for the information!

  18. Frank says:

    Hi, this is a really great blog and this article is fantastic. I came upon it as I am trying to find out which bank in the US, specifically in California, will open a bank account for me in my dba name (and thus also lets me have checks that feature my dba name only). I am trying to avoid confusion: I am not talking about an LLC business account, that’s easy. I mean dba, which is substantially different. I know that most major banks do not open accounts and issue checks for a sole proprietor who only has a dba certificate, they always want an avtual LLC registration. Could someone clarify if the banks listed here will open an account based on a dba name only?

    • Carrie says:

      My only advice is to ask a local bank or chat with an online representative to see if they will be able to open an account with your DBA name only. Since opening my account with Chase several years ago, they allowed me to use a personal account with a DBA. But I don’t think they allow this anymore. Good luck!

  19. Sandy says:

    Hi Carrie, I would like to work as a general transcriber for a transcription company, it’s an independent contractor job and they pay with PayPal. Can I open a premier PayPal with an EIN, or do I have to use my S.S. #? Also, do I need any kind of permit or city license for this type of job? Thank you and I love your blog.

    • Carrie says:

      Hey Sandy, great question. Yes, you can open a Premier account with PayPal using your EIN. This is what I’ve done in the past and it worked great. My husband recently got an independent chef contracting job and is doing the same thing. You don’t need any permit or license for this type of job. You’ll probably just have to fill out a W-9 form with the company so they can properly issue you a 1099 at the end of the year.

      • Sandy says:

        Thank you Carrie for the quick reply. You helped me with my questions. I will continue to read your blog because you inspire me to work from home so I can take care of my family. My Chihuahua dog appreciates you too!!!

  20. Pavel says:

    PayPal charges 2.9%+$0.30 per transaction – how is that a good banking option for a small freelancing business?

    • Carrie says:

      Great question, Pavel! First off, paying a small amount like that for transactions through PayPal is nothing compared to the overhead and other expenses most small businesses have to pay to get up and running, so it’s not that bad when you think about it. Plus, it’s a tax deductible expense (PayPal fees, I mean).

      On the other hand, I talk a lot about using accounting software that allows you to only pay $0.50 PER PAYPAL TRANSACTION so that’s why I highly recommend it, and use it myself. You can read more about my explanation in this post: http://www.carefulcents.com/avoid-invoicing-fees/

  21. Ron Russell says:

    Ok. this article just changed where and how I was going to put my finances for my entrepreneur endeavor, and likely will save me a bunch of money over the long term. My sincere thanks to producing this and maintaining it as well.

    + 1 subscriber

  22. Raisa Delima says:

    I’m glad you talked about finding bank accounts that don’t have monthly maintenance fees. That is a good thing to look for if your business is small and can’t afford fees, like you said. I do think you should look at all of the benefits a bank has to offer first, though. Some banks have maintenance fees that are outweighed by the benefits and promotions they offer, you want to make sure you weigh out your options.

  23. Tim says:

    Here’s a question: Do you contribute to any retirement accounts? If so, do you pay into these from your business or personal account, and why?

  24. Chris says:

    “Basically anything you can do with a regular bank account, you can do with a PayPal business account — and more”

    Hmm, not quite. PayPal does not have a Bill Pay service to pay standard bills, like a regular bank account.

    • Carrie says:

      True. While PayPal doesn’t have a bill pay service, you can still sign up for automatic bill payments and use your PayPal account to pay them. That’s what I do!

  25. Wendy C. says:

    Hi Carrie,

    I am starting off as a consultant with dba (which from research didn’t seem that I actually needed one since I am using my name) and this blog has been incredibly helpful. I have been trying to download the Free checking account checklist and it does not seem to be working. Is this still available? Thanks!

    • Carrie says:

      Hi Wendy, I’m glad you found this post helpful! Yes, the checklist is still available — please send me an email (carefulcents@gmail.com) and I will forward you the PDF. Thanks and sorry for the inconvenience!

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