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Would You Pay $50 a Month to Make Bank Deposits?

After 18 months of various freelance endeavors, I finally decided to change my web design business from a sole proprietorship to an LLC last week. (More about the actual process to come later!) It doesn’t really change much as far as the way I conduct business, except it creates a better separation between my business and personal finances. Now if someone sues my business, my personal assets are protected and vice versa.

Anyway, one of the major things I need to do is open a separate business checking account. Even though most of my income and spending flows through PayPal, I still need to be able to write and accept checks for certain things. It will save a TON of headache at tax time. (Shout out to all my accountant friends who have provided info and advice!)

So I have two options – I could either open a business account at a local bank, or I could look at bigger banks. Both come with advantages, but they also have caveats that make this decision one of the toughest I’ve faced in awhile.

The Pros and Cons of a Local Business Account

This fall, I plan to expand my design services by offering them to local businesses in my area. As you guys know, I live in a very small town, and there are all kinds of little stores and shops, none of which has a presence on the web. There is also literally no one within 50+ miles who provides the services I do.

Part of small town life, especially when you own a small business, is supporting other small businesses. That means I might pay a little more to have t-shirts made or marketing materials printed versus ordering them online, for example, because it gives me the chance to build relationships with potential clients. Word of mouth is absolutely everything if I want to work locally. And naturally that should include using a local bank, right?

There are five banks in my county, all of which are tiny banks that no one has ever heard of (except maybe Old National, but it was ruled out immediately because of a bad past experience). And when I looked at the other local options for business checking accounts, I found “features” like these:

  • No online banking (or very limited online banking, and in one case there was a fee)
  • Really huge minimum balances that aren’t possible for my little newborn baby business
  • Monthly maintenance fees
  • Services that are clearly geared toward bigger companies

Basically, if I want a local banking relationship, I have to pay fees and/or give up things I need. Plus there’s always the risk of someone “sharing” the details of my business finances with people in the community. If you think that would never happen, you’ve obviously never lived in a small town.

The Pros and Cons of a Business Account with a Bigger Bank

My regular readers know how I feel about my personal bank account with PNC. I have the Virtual Wallet account and it is simply the best thing on the planet. So naturally I wanted to see what PNC offers in a business checking account; I didn’t even consider any other “big” banks.

As I expected, I can get a free business checking account with online banking, free bill pay, and no minimum balance. There is a limit on the number of transactions in a month, but at this point it’s way more activity than I would ever have. There are also options to upgrade if my income and expenses grow beyond the limits on the account.

The only problem? The nearest PNC branch is 50 miles from my house. With Virtual Wallet, it’s not a problem because I can do everything online or from my phone. But with a business account, I don’t have the option for remote deposit from an app – I would have to drive all the way to the nearest branch. Right now I don’t receive payments in check form, but I’m sure that will change if I start working with local businesses.

PNC does offer a cool solution – they have this little check scanner called DepositNow that lets you deposit checks right from your desk. However, it costs $50 a monthIt would be cheaper for me to drive the 100 miles round trip to make the deposits in person (assuming I only did it once a month), though that’s certainly not a convenient option. So if I want to stick with my current bank that offers all the other stuff I want, it’s going to cost me. Then again, the fees are deductible as a business expense.

What Would You Do?

I’ve completed my research with the same question I started with – do I choose a local bank with monthly fees and limited options for online banking, simply because it could help me get my name out into the “good ol’ boy” network in my town? Or do I choose the bank I use and love for my personal accounts, but pay a little more in fees to be able to make deposits?

I’d love to hear your perspectives on this one! What would you choose in this situation? Any small business banking stories I should consider, good or bad?

Edit: After I wrote this post, I contacted PNC and found out that they do, in fact, allow mobile check deposits for business accounts. This is a recent change. So basically I wrote a big long post for nothing, but that’s okay. It isn’t the first time and I’m sure it won’t be the last.

About Andrea Whitmer

Andrea is a freelance web designer and single mom trying to maintain a sense of humor in an otherwise chaotic world. She blogs in hopes of helping others avoid the same mistakes she made in the past. Join in the discussion here on So Over This, or connect on Facebook, Twitter, Pinterest, Instagram, or Google Plus. You can also subscribe to new posts via RSS so you never miss out!

Comments

  1. You're leaving out an option: Mail your deposits to the bank. The type of business you do, it's not like you're going to be receiving dozens of checks a day for small amounts. It's more likely that you'll receive a handful of checks each month for fairly large amounts. So once a week (if you need to that often) bundle up all the checks you've received and send them in a Priority Mail (delivery confirmation) envelope. It'll cost you $4.50, plus you'll get online tracking to make sure the envelope gets there. I've mailed deposit checks to my business account for years and never had an issue.

    Banking locally is very very unlikely to "get your name out", based on my experience. I've owned businesses in teeny tiny little towns in East Texas (think population 1000 or less) and banking locally just is a non-issue from the standpoint of getting business.

    • americandebtproject says:

      Yea that was just what I was about to suggest! I do deposit by mail a lot for some of my side businesses. It takes a few extra days to process but it's free and easy. I actually mail via regular mail and have never had a check lost in the mail.

      • LadiesGoFirst says:

        Such a great point! Sending it by mail should avoid a lot of fees. We bank with a local credit union that doesn't charge us anything. We were able to get in through a family referral. Is that option available to you? Such a bummer to pay someone money for watching yours…..makes my heart hurt.

    • You know, I kind of feel like a dork because I didn't think of that! I just never had to do it before.

      Re: the getting my name out thing, it's less about the actual bank and more about the employees. All it would take is opening the account and all the people working would want to know what kind of business it is and what I do. Next thing you know, someone mentions needing/wanting a website and the person goes, "Oh! I know someone who does that!" That's actually how I found my landscaper and the lady who cuts my hair; I had a friend who worked at one of the local banks and they had come in to talk about something with their business accounts.

      • If you really feel that opening a local account will help your business, then open both. Use the long distance one where you mail the checks in as your main account and the local account as a tax account for paying your taxes from. Periodically write a check off of the operating account to deposit into your tax account. (this is assuming that your local bank won't charge you minimum balance fees or anything)

        That way you get the benefit of both. Online banking and service for your daily transactions and a local relationship from the account that you have to write maybe 6 checks a year out of.

    • I "third" this suggestion re: mailing deposits. I'd definitely do that over the $50 per month. (If you were looking outside of local banks you could also look at other big banks that might have better programs for you like remote deposit for business accounts that are cheaper or free.)

      By the way, have you checked http://www.checkingfinder.com? I don't know if they do corporate accounts, but I believe they are all credit unions or banks with online banking and no minimum deposits. You might find a decent bank there, too.

  2. Sign up for PayPal Here, it's the little credit card reader so you can take credit cards in person. The app also allows you to deposit checks by taking a photo like others. I just signed up for mine :)

    • I have Square – I have issues with Paypal Here (namely the hard pull on your credit report to get the stupid thing). But I still need to be able to accept paper checks and purchase orders if I'm going to work with local businesses.

      • Hmm didn't have that problem. Cheaper rate than square and the ability to deposit checks free sold me. My reader should be here any day :) heard to many stories about square holding funds.

  3. Woohoo! Congrats on the new LLC title – now it's really becoming official. Super excited for you and your new biz direction. You're awesome!

    I was going to suggest mailing in the deposits like Kara mentioned. That's what I do for several small businesses that I do accounting for. I actually work in a very small town (2,650 ppl – although I live in a much larger one 30 miles away) so I totally understand the frustration of having to search for business accounts at quality banks. Most banks will allow you to transfer funds (via ACH) or mail them in with a deposit slip. That's what I do and I've never had any problems.

    I definitely wouldn't pay any extra fees AT ALL if possible. That's just crazy! However, small towns equal limited options, so you'll have to weigh the options of convenience over savings.

  4. Looking forward to your post on LLC's vs Sole Proprietorships!
    Chase

  5. I think the PNC is the way to go with the options mentioned above for checks. We use a local bank, but we have checks and cash that have to be deposited daily. The locals do talk so if you want your business private, I would avoid that if possible. You're right about making connections with the local businesses. Spending a little more is worth it to get that word of mouth advertising. I was in a business networking group for a while, and the web designer just racked up because no one had a clue how to do a website, but everyone wanted one. He wasn't even that good, as you can see from my office website. I think you're going to do great.

  6. I always prefer to go with who ever treats me the best, regardless of fees. If the good ole boy network isn't doing it for you, then you know what you've got to do.

  7. Andrea, are you 100% positive there aren't credit unions in your area? Even within 50 miles?

    • There is a credit union here, but I don't even consider them because there isn't even an option for online banking and I would be limited to a certain number of debit card swipes per month. I know a lot of people love credit unions but I haven't been impressed with the 2 I've dealt with in the past.

  8. Personally, I would go for the cheaper alternative at a larger bank. Count on online marketing and most of all excellent products and services to spread the word.

  9. I would see if you can mail deposits. If not I think Ing direct has business savings accounts but I don't know much about it. Maybe you could set up an ING account and remotely deposit checks there then transfer to your main pnc account a couple times a month… food for thought.

  10. I think I am with everyone else that is saying mail deposits. There are plenty of online banks (business accounts included) that do mail deposits. Like for instance USAA for business, online and mail deposits or other online accounts that do mail deposits and not business accounts like ING. I think it would be easier and I don't understand why the local bank would get you into networking with the other businesses. Wouldn't networking and getting to know all of the other businesses be just the same and make banking easier?

    • I said this in another response, but it's more about the word of mouth from the employees, not the bank as an entity. If I'm hanging out in there, making business deposits or whatever, people are going to wonder what I'm doing. They're just too nosy not to around here!

  11. I think a lot of big league banks are offering remote check deposit. Its do it or loose it type of feature. Chase offers me this one since last year.

    • Actually, after this post went live I called PNC and they do offer remote deposit for business accounts now. I have it for my personal but it only recently became available for business.

  12. There is another new thing called SQUARE that lets you take cc payments on your Iphone. As far as those two options are concerned, I'd pay the $50. I don't like mailing things, and I wouldn't want to drive 50 miles each way to deposit cheques.

    • Yep, I have Square and I love it. But I need to be able to accept paper checks and purchase orders to work with local businesses – a lot of the super small ones (like the size of mine) don't even have business CCs.

  13. nellterry says:

    Yea I was about to agree with frugalportland's credit union comment. They're the best things EVER. I'm with one after being burned repeatedly by large banks, and I've never looked back. Plus you get that local connection you're looking for…

    • Unfortunately I just haven't had that experience. I have had accounts with two credit unions in the past – one where the tellers were bitchy and rude, and another where I could only use my debit card 20 times a month. I much prefer PNC – it's not a huge national bank, but a regional one and the service is excellent.

  14. @Finance_Fox says:

    Hi Andrea!
    Congrats on going LLC you high-roller-you!
    I'd go with the "bigger" bank strictly for online banking. If you need to do deposits, you can make a trip once a month to the bank or mail deposits.

  15. This may seem like a stupid question, but why can't you just have a separate checking account. Does it have to be a "business" account for tax purposes or are there inherent features to a business account that is necessary?

    • The main thing for me is being able to provide my federal EIN instead of my SSN. It's a small thing, but that means the checking account belongs to the business and not me personally. So, for example, if I'm ever in a car accident and the other driver sues me, no one can take the assets in the business checking account. But if it's just a personal account that I say is for business, someone could argue that it's not *really* a business account and I could lose all my money.

  16. It looks like the suggestion has been made already: mail the deposits. I think it depends on how many deposits you take in a month. Then compare it to the convenience of scanning (paying $50) or free but have to wait for a longer time for the checks to be deposited. PNC is a good bank.

  17. you have crappy banks in your neck of KY

  18. In my dealings with banks, I go for personal relationships. Try to find a flesh-and-blood individual who you can relate to, and who is understanding of, and sympathetic to, your business goals. For example, in my business of hosting http://www.moneygraffiti.com, I ask bank managers to save all their "doodled-on" bills for me. Those who think I'm crazy or do not have sufficient time nor interest to check out what I'm doing, are not going to get the lion's share of my business.

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