Recently, my partner and I created an LLC and have secured about 30K in capital to start our online company. We are in the process of choosing a bank to work with and would appreciate some guidance. I believe we should set up a corporate savings account (for the bulk of the 30K) and set up some type of business checking account for day to day operations. Also, we will be taking in membership fees (probably using authorize.net) and I'm not sure if that money should flow into a separate account all together - or the checking or savings account I mentioned opening above.
Any guidance as to good banks to choose with low (or no) fees for small business would be much appreciated.
Those fees really add up and you will have to do some research comparing rates locally specifically for the type of business you are going to do. Note that national banks have different schedules in different states.
We are in Seattle and I had to resort to a two bank solution:
Bank of America for day-to-day operations. They work for us because they:
I re-evaluate our banking choices yearly.
I just setup an account through a community bank. I figured, as a small business person, I should support local businesses. I used http://moveyourmoney.info/ to find a local bank that was rated well. I ended up with The Mechanics Bank, which is local to the San Francisco Bay Area. So far, so good. The big selling point for Mechanics Bank was that they had totally free business checking.
I would stay away from the Bank of America, Citi, Chase, and any other large banks (unless you like to be treated like just a number and pay high fees). You can get same services and access to tech (online banking, remote deposits, etc.) for less money. Many community banks have free small biz checking too.
In two of the startups I headed operations we have moved away to small banks and never looked back. At a big bank you talk to a branch manager with no real power, at a community bank you can talk to a real VP with real decision making power.
Also, do not forget it is never too early to build relationship with the decision makers at your local bank, because come time for credit and you will have MUCH easier time clearing the hurdles.
My wife has a business and set up a Chase business account for her LLC. She has both checking and Savings accounts and chose the Continental debit card as it give sher miles for all purchases she changes to the card. Since we live in the NYC Metro area this made sense as Chase branches are everywhere. So far, my wife is happy with Chase.
I also chose a local community bank because they had no fees. I refuse to spend money each month for banking fees. It is obscene.
Are either of you good and/or experienced at accounting/financial management? If it were me, since financial management isn't one of my own talents, I would definitely keep your income, assets and expense accounts separate at the level of the bank accounts themselves. It is conceptually/ontologically easier to manage the separate categories of financial activity if they correspond to distinct bank accounts. So this is another reason for going for a low-fee/no-fee bank - you won't have to pay higher fees to set up additional accounts or transfer sums between accounts. You might want to use a hypothetical tax return as a guide for setting up your accounts. Whatever major asset, liability, income and expense categories you will have to report on, you may want to consider setting up distinct accounts for those. This will simplify your reporting process at filing time, since your bank statements will already match the different categories you must report on.
On the sayings side, especially if money is just going to sit there, I agree with the Oleg and ING or some other high interest savings account. Check out bankrate.com, I think it is, for the banks with the highest offered rates. Many of the non-brick and mortars will be able to out do their bigger brethren, especially the web-only banks.
I would like to add that I've worked with the same banker at Bank of America for the last 5 years. She drafted our original accounts docs and we still work together to this day. So it's not impossible to have a lasting relationship with someone at a big bank. Of course, she's not the bank VP or even anything close.