Monday, December 04, 2006

Bank Account + 1099 Land

Today I opened a business bank account.

Wachovia has annoyed me in the past with a crappy fee or two stemming from their recent changes to online check writing. It changed an online check writing model that was simple to one that was overly complex. A $100 fee later, I understand the system.

Anger alone made me wish to change, but it doesn't make good business sense. The local options for banking don't seem to exceed Wachovia's integration with yodlee, the company that ties all financial accounts together for consumers. So I'm stuck with Wachovia. The fact I have been with them (or a bank they bought) since 1992, could help getting a line of credit for the business (not holding my breath, mind you).

It took approximately 40 minutes to open the account, choose checks, choose which business account I wished to sign up for, and to get a cashier's check to pay my accountant (I don't have printed checks yet, they'll come sometime next week).

Remember, bank accounts should always be free: The bank is loaning out your money. Wachovia is waiving all minimum balance fees, upgrading my personal accounts to "crown" (their premiere service) and is paying for the first couple orders of business checks.

To get the business checking account, I needed the following:
  • EIN of the business
  • Articles of Organization
  • My drivers license

They took a copy of two pages of the articles, and had me fill out two forms where I merely stated my position, my company's tax status, filled out signature cards, and filled in my EIN. Remember, I got my EIN online from http://georgia.gov when I filed for it from the IRS. It's technically a provisional EIN, but as long as I've filled out all the forms and answered all questions in good faith, I'm not worried (many of the forms state something to the effect that good faith==good enough).

After I got the bank account finished, I called the staffing company who's been paying my paychecks. He agreed to different terms for hiring my company in lieu of myself, including the increase freedom he has to allow me. He's done this several times before evidently. All I had to do to seal the deal was download and fill out a W-9 form from the IRS (it's a lot like the W-4 you fill out when you get a normal job, except much shorter) and fax it to him.

Under our former arrangement, he would have direct deposited money into my personal accounts. Now, he'll write a check to my business (weekly, he's great like that), and I'll deposit them into the business accounts. Once a month, I'll pay my self my salary (and perhaps take an owner draw on profits). If once a month seems harsh to you, I'll say its how my first job out of school paid, so I'm used to it. I really recommend the system for young people: It enforces the maintenance of a monthly budget.

I do need to still find out what forms I need to fill out on myself as an owner/employee. I may be filing a W-4 for myself with my company. I'll keep you posted.

--Michael

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