Randall Wood

Lets go to the bank

The next step of this whole company-building process is to establish a banking account for your sole-proprietorship. The reason for this is simplicity and taxes.

You’ll want to establish your business account with both checking, and a credit card issued in the name of your business. All your business transactions, from this point forward, should be done using one of these two forms of payment. I took the extra step of opening a PayPal account using the company credit card as well.

Fortunately, banks are all too happy to open a new business account, even if it’s one as small as you’ll need at startup. Most offer free internet banking and bill payment. You’ll be able to transfer funds, check balances, access images of checks, and download data as needed. It’s easy to do and they walk you through the process step by step. If they don’t offer these things I listed, or they come with a fee, find another bank.

There’s one important thing to know about transfers. They can’t be done online. If you have a regular bank account within the same bank, say one that your day job paycheck gets directly deposited into, you won’t be able to transfer money from that checking account into your business checking account without contacting the bank first and setting up the transfer. There may be a small fee involved.

You can thank people of the Bernie Madoff genre for this. It’s a rule that prevents people from moving money in and out of their business at will and without a middle man. I suggest planning your company purchase’s well ahead and moving your money back and forth as little as possible to avoid the fees involved.

This of course leads to the simplicity part. Your accountant will thank you if you keep your business and personal expenses separate, particularly at tax time.

Why is this important? Business start-up expenses are all tax deductible in some shape of form. Learning what you can and can’t claim is a subject for another post, but some examples of things you can write off are; office supplies, software, your state and county registration fees, your PO Box, business cards, website fees, postage, ISBN’s, formatting, coverart, and editing fees, your public notice, copyright fees, trademark fees, and even the computer your using to write your books. That’s only a fraction of what you can claim and it would be well worth it to learn everything you can about business taxes.

The bank will want your e-mail address. That’s a double edged sword as with it they can notify you of any problem with your account quickly, not necessarily a bad thing, but the down-side is they get to spam you with every “special offer” they can come up with. It’s bad for the first month or so, but tapers off after that. If they allow you to opt-out do so, you’ll see all their offers on your account web-page anyway. You’re not going to miss anything.

You’ll also be asked to pick out your checks. It may be an internal service or an outside source they work with. If you’ve designed a logo for your publishing company, and had it trademarked, you can have it printed right on your checks for a small fee. If not, just get some generic ones until you do. Not really necessary, but it looks professional.

Some banks even offer points for using your business account. Having lunch with your coverart designer? That’s a business meeting and you can claim it. Spend some time at a writer’s conference or take a class? You can claim the fee and the travel expenses as a business trip. The advantage of having your own business starts looking good at this point. Add up those points and celebrate that new book coming out.

To summarize, having a good relationship with your bank is something every business needs in order to prosper. Since a lot of success in this writing game seems to come both quickly, and as a surprise, having the banking end of it already in place just makes good sense.

The smart writer/businessman is like a boy scout; always prepared.

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