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This web site operates from the prospective that the user already
has a business entity and the entity of choice is the S-corporation.
While good business practices may apply to every business, the user
must decide whether to use and how to apply the content found here.
The authors cannot. As always, read all closely and think before you act.
Bank Interruptcy…
With all the recent hoopla surrounding banks (bailouts, sub prime financing, poor security practices, over paid executives, for examples) and the consumer chastisement that followed, readers do not need this writer to tell them “Banks are not your friends.” So, why should the banker legacy matter here? Easy answer.
Most small business persons frequently make the mistake of being mono-denominational in their banking. That may be convenient, but is not a sound business practice. If one reads the fine print in their banking terms and conditions received when opening the accounts, he would know that when tendering his money to the bank, it is “in effect” now the bank’s money. Granted one has a credit, but not the dollars.
What was, isn't.
Hence, should one of the accounts, let us say the business account in the bank de choix, have a problem, the bank can ding one’s personal account for cash to secure their position. If that happens on a Friday, notice of the bank action could take three calendar days, or more.
Busy people, like today’s entrepreneurs, are likely to quickly amass multiple problems when money is not where it was to be. Because the funds are moved (legally, pursuant to prior consent at the opening the account) without notice, fees are sure to follow. (The subject of reasonable fees, charges and assessments is beyond the scope of this posting.)
Simple Solution:Â Always, yes always, do your business banking at a different bank (not a merely a branch office, a different institution) than where you do personal banking. By organizing in this manner, it is guaranteed that no unannounced cross-account transfers of money will occur. Hence, no chance for subsequent unscrupulous banks fees.
When doing business, always operate from the position that offers the most control over your efforts and the results. If you are struggling with that, call JACS.
Written by James Allen, July 25th, 2009
Filed under: Treasurer
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