Step 5: Business Banking

Separate Your Business & Personal Finances


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Estimated Time: 45-90 Minutes

Open your business bank account to establish financial separation and unlock business-only services. This step is crucial for asset protection and IRS compliance.

Why Business Banking Matters

Asset Protection: Mixing personal and business funds is the #1 way to lose your LLC protection. Courts can "pierce the corporate veil" if finances aren't separate.

Tax Benefits: Business accounts make tracking deductible expenses simple and provide clean records for tax preparation.

Professional Credibility: Business accounts allow you to accept payments in your LLC name and build business credit history.

Critical Requirement: You MUST have your Articles of Incorporation approved and your EIN number before opening a business bank account. Banks will ask for these documents.

Bank Selection Guide

Choose a bank that fits your record label's needs. Consider fees, online banking features, and music industry friendliness.

Chase Business Complete Banking

Monthly Fee: $15 (waived with $2,000 balance) • 200 transactions included
âœ" Best mobile app • Great for frequent transactions • Easy online account opening
✗ Higher fees • Requires higher balance to waive fees

Bank of America Business Advantage

Monthly Fee: $16 (waived with $3,000 balance) • 200 transactions included
âœ" Large ATM network • Good business credit cards • Industry experience
✗ Higher balance requirement • Limited free transactions

Wells Fargo Business Choice Checking

Monthly Fee: $14 (waived with $500 balance) • 100 transactions included
âœ" Lower balance requirement • Established bank • Good for startups
✗ Fewer free transactions • Past regulatory issues

Capital One Spark Classic

Monthly Fee: $0 • Unlimited transactions • No minimum balance
âœ" No fees • Great online banking • Good for low-volume startups
✗ Limited branch locations • Newer to business banking

Local Community Banks

Fees vary • Often relationship-based
âœ" Personal service • Local decision-making • May understand music business
✗ Limited online features • Fewer locations • Variable quality

Required Documents

Gather these documents before visiting the bank or starting online application:

Bank Account Opening Checklist:

  • Articles of Incorporation (state-approved)
  • EIN Letter from IRS
  • Operating Agreement
  • Government-issued photo ID
  • Virtual address proof (if using)
  • Initial deposit ($25-$100 minimum)
  • Business license (if required in your state)
Pro Tip: Call ahead to confirm document requirements. Some banks have specific forms or may require additional documentation for LLCs in the music industry.

Account Type Selection

Choose the right account type based on your label's expected transaction volume and cash flow:

For Most Record Labels:
Business Checking: Primary account for daily operations
Business Savings: Hold reserves and build emergency fund
Consider Later: Business credit card for building credit history
Initial Deposit Strategy:
Deposit enough to waive monthly fees if possible. Even if it's just $500-$2000, this saves $12-16/month in fees and shows the bank you're serious about the business relationship.

Banking Best Practices

Establish good banking habits from day one to maintain your LLC protection:

NEVER Do These:
• Use business account for personal expenses
• Deposit personal funds into business account
• Write business checks for personal items
• Mix cash between personal and business use
ALWAYS Do These:
• Keep detailed records of all transactions
• Use business account only for LLC expenses
• Transfer money between accounts with clear documentation
• Reconcile accounts monthly
• Save all receipts and statements

Step 5 Summary

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