Free Enterprise - The FindLaw Small Business Law Blog

Do I Really Need a Business Account for Banking, Internet, and Other Services?

When small business owners start out, often, they use their own personal accounts to get going. And it's not just limited personal bank and credit card accounts, but also personal phone lines, personal internet services, and even personal cable TV or music subscriptions.

Small business can operate for years using personal services, but legally, it could result in some serious legal trouble. For example, if your business operates from your personal bank account, even if you are structured as a corporation, you will likely be found personally liable in any legal disputes the business faces.

Business Banking

Businesses, even sole proprietorships, should have their own financial accounts. Minimally, business owners should have a separate business checking account in order to keep their personal and business finances separate. When a formal business structure is formed, using personal accounts to run the business will expose the owner to the personal liability that the formal business structures are designed to protect.

Business checking accounts can often be set up for free at your local bank or credit union.

Personal Subscription Services

When it comes to services for phone, internet, and entertainment, how each is used will matter significantly. For instance, a restaurant or bar, or other business, that wants to show a big game, or even unpopular music, can get in trouble if they do not have permission or follow specific rules. Some TV and entertainment providers offer business packages that allow the broadcasting of sports, other televised events, and music.

For small businesses, offering fringe services to customers, like WiFi access, can be a boon for business, just like hosting events for big games. However, businesses may need to look at their internet provider's contract (and the potential liability) when it comes to sharing their WiFi with customers, and maybe even for their own employees.

The same goes for using a personal phone line for business purposes. If you are handling a high volume of calls, or using an obscene amount of bandwidth, because you are using a personal phone line or internet subscription for business purposes, your provider may notice. Even unlimited accounts have limits, and if you are violating the terms of your service agreement by using a personal account for a business, then your provider could stop services and require you to sign up for a business plan.

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