Need to separate biz transactions from personal -- do we need a biz checking account?

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doss
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Need to separate biz transactions from personal -- do we need a biz checking account?

Post by doss » Thu Nov 07, 2019 1:12 pm

Wife has a small side business (she's a stay at home mom) that is also registered as an LLC in the state of Missouri (in which she is also a co-member/organizer of this business with her sister).

Question:
Right now she is mixing her business deposits/purchases together with the rest of her and my personal joint checking account. I would like to separate my wife's transactions from our personal checking. Do I need to open a standard business checking account somewhere? Or, what are some other options we can do to keep things separated, simple and easier to monitor? The idea is that she would deposit her payments in some account and then use that account to also pay an associated credit card that she also uses to make charges. Also, she doesn't bring in more than $500/mo , so I don't know if it's worth opening a biz account that has a monthly minimum in order to avoid fees.

Just looking for ideas and tips on how we can keep our finances separate. Thanks!

fareastwarriors
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Re: Need to separate biz transactions from personal -- do we need a biz checking account?

Post by fareastwarriors » Thu Nov 07, 2019 1:17 pm

I keep would separate accounts for tax purposes and ease of tracking. You don't have to get a business account if you don't want to. Just get another personal checking account and use it for the business.

CFM300
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Re: Need to separate biz transactions from personal -- do we need a biz checking account?

Post by CFM300 » Thu Nov 07, 2019 1:21 pm

Low-end Chase business checking account is just $12/month if you sign up for paperless statements. So $144/year. If you maintain a balance of just $1,500 in the account, the monthly fee is waived.

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cowdogman
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Re: Need to separate biz transactions from personal -- do we need a biz checking account?

Post by cowdogman » Thu Nov 07, 2019 1:30 pm

I had this issue with my wife's business for years. If your wife is filing a Schedule C as a sole proprietor, it's not necessary to have a separate account.

We finally opened a Chase business checking account for her business and got a Chase Ink business credit card (with the bonus point offer).

It is nice to have the ability to segregate the income and expenses, and maybe (?) it adds some more validity (for tax purposes) to those business expenses that are borderline personal.

The Chase business accounts have no monthly fee if you are a Sapphire Checking customer (or have a min balance of $1,500--as CFM300 noted above).

HomeStretch
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Re: Need to separate biz transactions from personal -- do we need a biz checking account?

Post by HomeStretch » Thu Nov 07, 2019 1:36 pm

A business checking account and a business credit card are useful to transact all LLC receipts and disbursements and segregate them from your personal transactions.

Check the DoctorOfCredit website for reviews of business cards. I opened the Chase Ink card and received an easy $500 cash bonus based on initial spend.

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dm200
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Re: Need to separate biz transactions from personal -- do we need a biz checking account?

Post by dm200 » Thu Nov 07, 2019 1:38 pm

doss wrote:
Thu Nov 07, 2019 1:12 pm
Wife has a small side business (she's a stay at home mom) that is also registered as an LLC in the state of Missouri (in which she is also a co-member/organizer of this business with her sister).

Question:
Right now she is mixing her business deposits/purchases together with the rest of her and my personal joint checking account. I would like to separate my wife's transactions from our personal checking. Do I need to open a standard business checking account somewhere? Or, what are some other options we can do to keep things separated, simple and easier to monitor? The idea is that she would deposit her payments in some account and then use that account to also pay an associated credit card that she also uses to make charges. Also, she doesn't bring in more than $500/mo , so I don't know if it's worth opening a biz account that has a monthly minimum in order to avoid fees.

Just looking for ideas and tips on how we can keep our finances separate. Thanks!
Yes - there are many advantages of a separate checking account.

Thegame14
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Re: Need to separate biz transactions from personal -- do we need a biz checking account?

Post by Thegame14 » Thu Nov 07, 2019 1:50 pm

how would this work for example, if I have a small side hustle where I manage Facebook Advertisements, so I need to use my cell phone to call clients, but also use my phone to try to get clients as well. So if I make enough money this year, and purchase a new laptop or cell phone, how do I determine how much I can claim as a business expense? It would be very hard to try and figure out how much time I spend on personal vs business.

CFM300
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Re: Need to separate biz transactions from personal -- do we need a biz checking account?

Post by CFM300 » Thu Nov 07, 2019 4:52 pm

Thegame14 wrote:
Thu Nov 07, 2019 1:50 pm
how would this work for example, if I have a small side hustle where I manage Facebook Advertisements, so I need to use my cell phone to call clients, but also use my phone to try to get clients as well. So if I make enough money this year, and purchase a new laptop or cell phone, how do I determine how much I can claim as a business expense? It would be very hard to try and figure out how much time I spend on personal vs business.
https://www.google.com/search?q=deduct+ ... cell+phone

https://www.google.com/search?q=deduct+ ... l+computer

Thegame14
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Re: Need to separate biz transactions from personal -- do we need a biz checking account?

Post by Thegame14 » Thu Nov 07, 2019 5:05 pm

CFM300 wrote:
Thu Nov 07, 2019 4:52 pm
Thegame14 wrote:
Thu Nov 07, 2019 1:50 pm
how would this work for example, if I have a small side hustle where I manage Facebook Advertisements, so I need to use my cell phone to call clients, but also use my phone to try to get clients as well. So if I make enough money this year, and purchase a new laptop or cell phone, how do I determine how much I can claim as a business expense? It would be very hard to try and figure out how much time I spend on personal vs business.
https://www.google.com/search?q=deduct+ ... cell+phone

https://www.google.com/search?q=deduct+ ... l+computer
My whole point was I would have no way to breakdown the percentage used for personal vs business, so posting a link that literally says to do the one thing I said I cannot do, doesn't work.

fareastwarriors
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Re: Need to separate biz transactions from personal -- do we need a biz checking account?

Post by fareastwarriors » Thu Nov 07, 2019 5:10 pm

Thegame14 wrote:
Thu Nov 07, 2019 5:05 pm
CFM300 wrote:
Thu Nov 07, 2019 4:52 pm
Thegame14 wrote:
Thu Nov 07, 2019 1:50 pm
how would this work for example, if I have a small side hustle where I manage Facebook Advertisements, so I need to use my cell phone to call clients, but also use my phone to try to get clients as well. So if I make enough money this year, and purchase a new laptop or cell phone, how do I determine how much I can claim as a business expense? It would be very hard to try and figure out how much time I spend on personal vs business.
https://www.google.com/search?q=deduct+ ... cell+phone

https://www.google.com/search?q=deduct+ ... l+computer
My whole point was I would have no way to breakdown the percentage used for personal vs business, so posting a link that literally says to do the one thing I said I cannot do, doesn't work.
You can estimate. Or just don't take the deduction.

BeTheMatch
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Re: Need to separate biz transactions from personal -- do we need a biz checking account?

Post by BeTheMatch » Thu Nov 07, 2019 5:18 pm

If she has an LLC, she can get a business account at Azlo. And everything is free. ACH payments, bill pay, deposits. Everything. No minimum balance. Nothing.

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Tamarind
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Re: Need to separate biz transactions from personal -- do we need a biz checking account?

Post by Tamarind » Thu Nov 07, 2019 5:22 pm

BeTheMatch wrote:
Thu Nov 07, 2019 5:18 pm
If she has an LLC, she can get a business account at Azlo. And everything is free. ACH payments, bill pay, deposits. Everything. No minimum balance. Nothing.
+1. This is what I use for my side hustle.

HomeStretch
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Re: Need to separate biz transactions from personal -- do we need a biz checking account?

Post by HomeStretch » Thu Nov 07, 2019 5:24 pm

Thegame14 wrote:
Thu Nov 07, 2019 5:05 pm
CFM300 wrote:
Thu Nov 07, 2019 4:52 pm
Thegame14 wrote:
Thu Nov 07, 2019 1:50 pm
how would this work for example, if I have a small side hustle where I manage Facebook Advertisements, so I need to use my cell phone to call clients, but also use my phone to try to get clients as well. So if I make enough money this year, and purchase a new laptop or cell phone, how do I determine how much I can claim as a business expense? It would be very hard to try and figure out how much time I spend on personal vs business.
https://www.google.com/search?q=deduct+ ... cell+phone

https://www.google.com/search?q=deduct+ ... l+computer
My whole point was I would have no way to breakdown the percentage used for personal vs business, so posting a link that literally says to do the one thing I said I cannot do, doesn't work.
If you cannot or will not estimate business usage, then the answer to your question is that you cannot deduct it as a business expense.

CFM300
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Joined: Sat Oct 27, 2007 5:13 am

Re: Need to separate biz transactions from personal -- do we need a biz checking account?

Post by CFM300 » Thu Nov 07, 2019 7:59 pm

Thegame14 wrote:
Thu Nov 07, 2019 5:05 pm
CFM300 wrote:
Thu Nov 07, 2019 4:52 pm
Thegame14 wrote:
Thu Nov 07, 2019 1:50 pm
how would this work for example, if I have a small side hustle where I manage Facebook Advertisements, so I need to use my cell phone to call clients, but also use my phone to try to get clients as well. So if I make enough money this year, and purchase a new laptop or cell phone, how do I determine how much I can claim as a business expense? It would be very hard to try and figure out how much time I spend on personal vs business.
https://www.google.com/search?q=deduct+ ... cell+phone

https://www.google.com/search?q=deduct+ ... l+computer
My whole point was I would have no way to breakdown the percentage used for personal vs business, so posting a link that literally says to do the one thing I said I cannot do, doesn't work.
The purpose of the links was to let you know that your question ("how do I determine how much I can claim as a business expense?") was easily answerable by a simple, obvious Google search.

Regardless, why do you say that it would be "very hard" or that you would have "no way" to calculate the percentage of business vs. personal use? Just keep a log of when you start and end business calls or do business work on your computer.

I log every minute of work I do in my business. I also categorize the work so that I can see how much time I'm spending on marketing vs. client relations vs. production vs. accounting vs. compliance, etc. It also allows me to calculate how much I truly earn per hour.

Good luck.

Thegame14
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Re: Need to separate biz transactions from personal -- do we need a biz checking account?

Post by Thegame14 » Thu Nov 07, 2019 11:34 pm

CFM300 wrote:
Thu Nov 07, 2019 7:59 pm
Thegame14 wrote:
Thu Nov 07, 2019 5:05 pm
CFM300 wrote:
Thu Nov 07, 2019 4:52 pm
Thegame14 wrote:
Thu Nov 07, 2019 1:50 pm
how would this work for example, if I have a small side hustle where I manage Facebook Advertisements, so I need to use my cell phone to call clients, but also use my phone to try to get clients as well. So if I make enough money this year, and purchase a new laptop or cell phone, how do I determine how much I can claim as a business expense? It would be very hard to try and figure out how much time I spend on personal vs business.
https://www.google.com/search?q=deduct+ ... cell+phone

https://www.google.com/search?q=deduct+ ... l+computer
My whole point was I would have no way to breakdown the percentage used for personal vs business, so posting a link that literally says to do the one thing I said I cannot do, doesn't work.
The purpose of the links was to let you know that your question ("how do I determine how much I can claim as a business expense?") was easily answerable by a simple, obvious Google search.

Regardless, why do you say that it would be "very hard" or that you would have "no way" to calculate the percentage of business vs. personal use? Just keep a log of when you start and end business calls or do business work on your computer.

I log every minute of work I do in my business. I also categorize the work so that I can see how much time I'm spending on marketing vs. client relations vs. production vs. accounting vs. compliance, etc. It also allows me to calculate how much I truly earn per hour.

Good luck.
there is no reasonable way to do this when part of the job is being on Facebook, but not all the time I am on Facebook is 100% just working, it is browsing local boards to see businesses posting and posting back to them asking if they need my service and just interacting on the boards can lead to a connection, so it is impossible to determine when that browsing is going to lead to work or if it is just browsing local facebook boards.... It is hard to explain. Or listening to a podcast about trying to get clients, or listening to training podcasts or browing forums to see how other peoplel are doing wiht their similar businesses, it isnt always clear to say ok now I am working, ok now I am just tooling around on facebook, or this podcast is for personal growth or this podcast can help my business. So there will never be any accurate way to come up with a real number, sure I can take a guess, but have ABSOLUTELY ZERO support for that number if asked to defend it.

CFM300
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Re: Need to separate biz transactions from personal -- do we need a biz checking account?

Post by CFM300 » Fri Nov 08, 2019 12:34 am

Thegame14 wrote:
Thu Nov 07, 2019 11:34 pm
it is browsing local boards to see businesses posting and posting back to them asking if they need my service
Work.
Thegame14 wrote:
Thu Nov 07, 2019 11:34 pm
Or listening to a podcast about trying to get clients
Work.
Thegame14 wrote:
Thu Nov 07, 2019 11:34 pm
or listening to training podcasts
Work.
Thegame14 wrote:
Thu Nov 07, 2019 11:34 pm
or browing forums to see how other peoplel are doing wiht their similar businesses,
Work.
Thegame14 wrote:
Thu Nov 07, 2019 11:34 pm
it isnt always clear to say ok now I am working, ok now I am just tooling around on facebook,
Really? You don't know when you're just "tooling around on FB" and not working vs. doing something with the goal of advancing your business?
Thegame14 wrote:
Thu Nov 07, 2019 11:34 pm
or this podcast is for personal growth or this podcast can help my business.
If the content of the podcast might help you grow your business, and that's why you're listing to it, then I'd classify it as work. But if you're uncertain, just count it as personal. It's really not that big a deal.
Thegame14 wrote:
Thu Nov 07, 2019 11:34 pm
So there will never be any accurate way to come up with a real number, sure I can take a guess, but have ABSOLUTELY ZERO support for that number if asked to defend it.
You're overthinking this. If you're generating SE income online, the IRS isn't going to doubt that you are using a computer and phone to conduct business. Just keep a log of when you're clearly using your device for work-related activity. Start time, end time, and a brief note about what you were doing. That will be sufficient.

But knowing the percentage of use is just the first step to understanding how much you can deduct and when. Of course you already know that because you carefully read the links I provided earlier, right? :D

Another solution: buy devices that you use ONLY for business. Then the cost is fully deductible.

Disclaimer: I'm not a lawyer, CPA, or EA.

Planner01
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Joined: Mon Dec 26, 2016 2:44 pm

Re: Need to separate biz transactions from personal -- do we need a biz checking account?

Post by Planner01 » Fri Nov 08, 2019 7:04 am

Right now Chase is offering a $500 bonus for the basic checking account. If you keep $1500 in it, it’s free.

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ResearchMed
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Re: Need to separate biz transactions from personal -- do we need a biz checking account?

Post by ResearchMed » Fri Nov 08, 2019 7:53 am

If you want or need to keep the business and self separate for potential liability (or other) claims, then... do NOT commingle finances. Have separate LLC banking/etc., accounts, titled for the LLC.
And a separate charge or debit card.
Keep it clean.

RM
This signature is a placebo. You are in the control group.

Topic Author
doss
Posts: 283
Joined: Tue Nov 01, 2011 9:52 am

Re: Need to separate biz transactions from personal -- do we need a biz checking account?

Post by doss » Sat Nov 09, 2019 11:44 am

Thanks for all the helpful responses. I think the free business checking service at Azlo.com is what I may be looking for. However, since my sister-in-law is also a member of the LLC, will this cause any issues if I set it up just for my wife? I did see this:
Can I give access to an employee or a business partner who wasn’t listed on your application?

Not yet—for now, you can only give access to a business partner who owns 25% or more of your business and is listed on your Azlo application.
From -- https://support.azlo.com/hc/en-us/artic ... s-partner-

My wife and her sister currently "do their own thing" and buy products for their booth and then split the profits each month. I am just trying to help my wife and I keep our transactions separate -- I don't know what her sister is doing and how she is organizing her finances. Is it still fine for my wife to go ahead and apply for the checking account for herself? When it's time to file taxes will this all just be even more of a mess?

Thanks!

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