What you need to know
Setting up separate banking for your business ensures clear delineation between business and personal finances, making it easier to track income, expenses, and deductions.
In order to have an S Corp and work with Collective, you must have a dedicated business checking account. You won’t use this account for any personal transactions other than transferring money to your individual checking account; think of it like setting up direct deposit from an employer.
Opening a dedicated business credit card account is optional. You can also choose to use the debit card associated with your business checking account, or convert a pre-existing personal credit card to a business-only card by ceasing to use it for personal transactions.
Business checking accounts
Selecting a bank
There are many different banks to choose from, and we encourage you to research your options before making your final decision. However, your bank must connect to Collective’s accounting platform; if transactions do not automatically upload we will be unable to complete your books each month. Collective uses Plaid to connect your bank to our accounting platform; if you’ve used Plaid with your bank of choice in the past, you should be all set!
Many of our members often find the smoothest connection to Collective’s platform with major banks:
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Chase (see their instructions for opening a business checking account)
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Wells Fargo
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Bank of America
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Capital One
Collective members also have the option to work with our partner, Mercury. Mercury is a service that enables you to open a free business bank account with one of their partner FDIC-member banks.
Based on our experience onboarding members, the following banks are not recommended due to intermittent connectivity issues with Collective’s platform. If you are currently using one of these banks, we suggest that you switch to one of the major banking institutions above:
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Apple Credit Card
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American Express Business Checking
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Citibank Business Checking
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Chase Amazon Credit Card
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Fidelity Investments
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Kabbage
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Lending Club Banking
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Mountain America Credit Union
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University Federal Credit Union
Opening and using your account
Once you’ve selected a bank, make sure you open the account using the EIN of your new LLC.
As a reminder, your bank must connect to Collective’s accounting platform (via Plaid). After your account has been set up, log into your Member Dashboard to confirm your bank account information.
Update your business bank account details in Gusto (instructions) so that you can run payroll to your personal checking account.
As soon as possible, start running all your business income and expenses through your new business checking account. Stop using your personal checking account(s) for any business transactions.
Make sure not to use your business checking account for personal transactions (other than transferring money to your personal checking account).
Business credit cards
Should you have a business credit card?
Just like your bank accounts, your business and personal credit card transactions must remain separate.
Opening a new dedicated business credit card account is optional, but it can help build credit specifically for your business. A strong business credit profile can be valuable when applying for loans, leases, or other financial products in the name of the business, and it can also help separate business credit from personal credit. Many business credit cards offer rewards, cashback, or other incentives tailored to business spending categories such as office supplies, travel, or advertising.
However, if your EIN is brand new you may not be able to get approved for a credit card under your business just yet. You can open a new personal credit card (under your SSN) to be used solely for business expenses, or convert a pre-existing personal credit card to a business-only card by ceasing to use it for personal transactions.
If you don’t want to use a credit card for business expenses at all, you can use the debit card associated with your business checking account.
Selecting a credit card
It isn’t necessary for your business checking account and credit card to be from the same financial institution. However, your bank must connect to Collective’s accounting platform; if transactions do not automatically upload we will be unable to complete your books each month.
Many of our members often find the smoothest connection to Collective’s platform with credit cards from these major banks:
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Chase
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Wells Fargo
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Bank of America
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Citibank
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Capital One
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Discover Card
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American Express
Using your account
Stop using your personal credit card(s) for any business transactions and make sure you don't use your business credit card for personal transactions. This includes redeeming rewards from your business credit card for personal use.
Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as financial or tax advice. It is not intended to be a substitute for obtaining accounting or other financial advice from an appropriate financial adviser or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.