November 18, 2019

consumer news

FEDERAL DEPOSIT INSURANCE CORPORATION

As a small business owner, you may be 

juggling the expenses of running the 

day-to-day operations of your business, 

the costs of expanding your business, 

and the responsibilities to protect your 

employees and your customers with 

your financial choices. Knowing you 

have all of that on your mind, here is 

some helpful information about banking 

for your business.

Deposit Accounts

Separate personal and business accounts

Many banks offer business checking 

accounts and business credit cards. Keeping 

your business accounts separate from your 

personal accounts has some benefits:

Protection – Business banking offers limited 

personal liability protection by keeping 

your business funds separate from your 

personal funds. The separation makes it 

easier to authorize employees to handle 

day-to-day business banking tasks. The 

Internal Revenue Service also recommends 

that you have a business checking account 

Business Cents

that is separate from your personal accounts 

because doing so can make recordkeeping 

for tax time easier. It may even be essential 

depending on your corporate structure. 

Receiving Payments – Your business 

accounts can help you establish convenient 

ways for customers to pay you with credit 

cards or use checks made out to your 

business, instead of involving your 

personal finances. 

In addition, many banks have a designated 

team focused on small business lending 

who can help you identify other useful bank 

products and services, such as lines of credit 

or term loan options. 

Find an account that best suits your 

business’s needs

Rates, fees, and options vary from bank to 

bank, so you should shop around to make 

sure you find the lowest fees and the best 

terms for your business. Before opening 

your business checking or savings accounts 

with a particular bank, make sure you gather 

information about its: 

PHOTO: GETTY IMAGES

• Introductory offers

• Interest rates for savings and checking

• Interest rates for lines of credit

• Transaction fees

• Early termination fees

• Minimum account balance fees

Know if your deposits are protected by

FDIC deposit insurance

Under FDIC rules, all deposits owned by a

corporation, partnership or unincorporated

entity (including a for-profit or a not-forprofit organization) at the same bank are 

added together and insured up to $250,000,

separately from the personal accounts of

the owners or members. The deposits of a

sole proprietorship — an unincorporated

business owned by one individual using a

business name — are insured together with

any personal funds the owner may have 

at the same bank in the single-ownership 

insurance category, up to $250,000 in total.

If you need assistance with determining 

yourinsurance coverage, speak to an FDIC

Deposit Insurance Specialist at 1-877-

ASK FDIC (1-877-275-3342) or use our 

Electronic Deposit Insurance Estimator 

(EDIE), an interactive calculator.

Getting Paid

As a small business owner, you’ll need

to decide how customers will pay you.

Whether to accept credit card payments is 

an important decision to make. While 

this form of payment is convenient for

customers, you may choose not to accept 

credit cards because of the fees and other

costs. You may allow customers to pay

using mobile apps. However, make sure

you carefully read the fine print of any

mobile app you’re considering so that you

are aware of any fees and limitations on 

funds availability.
In general, you’ll want to comparison shop

for a mobile app or debit and credit card 

processing service, since costs and other 

terms and conditions will vary. 

Business Loans

Small business owners usually need to 

borrow money to buy equipment, pay 

suppliers and employees, and otherwise 

finance their operations. To make sure 

you get a loan that fits your needs, there 

are some basics to consider.

Understand the different types of financing

For most small businesses, there are 

common ways to finance operations (not 

including investments or loans from family 

and friends):

Personal lines of credit – such as credit 

cards or home equity lines of credit are 

commonly used. 

Business lines of credit – which provide a 

convenient way for a business to borrow up 

to a certain dollar amount and repay it in 

installments with interest over several years. 

Business term loans – which establish a set 

dollar amount to be repaid in installments 

over three or more years, are commonly 

recommended for purposes such as 

financing the purchase of equipment or a 

vehicle. These loans often are secured by 

the asset that is purchased. 

You may also want to ask your bank about 

loans offered by the U.S. Small Business 

Administration (SBA). For instance, the 

SBA microloan program provides loans 

up to $50,000 to help small businesses and 

certain not-for-profit childcare centers start 

up and expand.

Improve your chances for loan approval

Create a Business Plan – A lender will 

generally ask to review your business 

plan when you apply for a loan. Prepare 

a business plan that shows the lender your 

roadmap to help your business succeed. 

The SBA has a free tool to help you develop 

a basic business plan.

Make Payments On-time – Just as credit 

bureaus maintain a record on your personal 

credit history, several companies track how 

businesses handle their finances. Making 

on-time payments to suppliers is one good 

way to show reliability. Also ensure that your 

personal credit report is accurate because 

a lender will likely review it when your 

business applies for financing.

Be Prepared

Some Protections May Vary

Your liability for unauthorized transactions on 

your personal credit and debit card accounts is 

generally capped by federal regulations — $50 

for credit cards and $50 or more for debit cards 

(depending on when you notify the bank). 

While federal law doesn’t protect business 

debit cards from liability for unauthorized 

transactions, your bank account agreement 

and state laws could limit your liability. If a 

credit card issuer provides 10 or more credit 

cards to a company for employee use, it may 

require the business to assume unlimited

liability for unauthorized transactions. If fewer 

than 10 credit cards are issued to the company, 

the $50 limit will only apply to unauthorized 

use by someone other than an employee of 

the corporation. The bottom line: Notify your 

bank immediately of any problems because 

state laws, industry standards and your deposit 

agreements may provide protections.

Beware of Frauds and Scams

Scammers target small businesses knowing the 

owners are busy and focused on running the 

business. To protect your business, be aware 

of the scams and frauds out there. Examples 

include unauthorized withdrawals from a 

bank account as well as fraudulent offers and 

counterfeit bills. An auditor may be able to 

help you identify and minimize risks. To learn 

more, including how to create customized 

cybersecurity plans, go to OnGuardOnline.

gov. The Federal Trade Commission also 

offers tips for small businesses.

For more small business resources, visit:

FDIC

https://www.fdic.gov/consumers/consumer/

moneysmart/business.html

SBA

https://www.sba.gov/

U.S. Treasury Department

https://home.treasury.gov/policy-issues/

small-business-programs

For more help or information, go to www.fdic.gov or 

call the FDIC toll-free at 1-877-ASK-FDIC (1-877-275-3342). 

Please send your story ideas or comments to Consumer Affairs 

at consumeraffairsmailbox@fdic.gov