Note: We are not legal experts or tax preparation professionals, so always consult an accountant, tax prep professional, or attorney if you have concerns. This information is aimed at copywriters in the United States. Copywriters in other locations may find this information useful for determining what questions they need to ask and answer based on their country, region, or city.
When it comes to business bank accounts, the first step is knowing what you need to do based on your business structure.
If you’re an LLC or corporation, you need a business bank account in your business’s name. Since most copywriters operate as sole proprietors, we’re going to focus on that.
As a sole proprietor using your legal name, you do not legally need a separate business account. You do need to keep your personal and business expenses separate.
But, that doesn’t mean you need to open an account in your business’s name. You can simply open another account in your name and direct all client payments to that account, as well as use a debit card tied to that account for all business purchases.
You should still put a monthly reminder on your calendar to go through your personal bank accounts to make sure there are no business-related purchases. If there are, note them so come tax time you will be able to add them as deductions as appropriate.
The key when it comes to banking is to have all your personal banking in one place, and all your business banking in another place.
If you’re operating under a DBA, you’ll want a business account that allows you to cash checks clients make out to your business name. Your bank may allow you to add a DBA to a personal account versus a business account.
To open a business bank account (rather than a personal bank account you use for business), you’ll need your EIN and you may also need additional documents depending on your business structure and your bank’s requirements. Ask your bank what information and documentation you’ll need.
Regardless of which route you choose to go, business or personal, look for no-fee options. Depending on the bank, there may be perks with business accounts that we don’t need as copywriters, like a line of credit.
If you like the bank you use for personal banking, that’s the best place to start.
At the very least, you need a separate account to set money aside for tax payments. The last thing you want is to face paying taxes on all the income you made in a year all at once, and not having the money set aside to cover it.
If you’re accepting payments via PayPal, you’ll want one account for your personal transactions and one for your professional transactions.
For more tips, listen to the Build Your Business Copywriting podcast, episode 11. We talked with a bookkeeping pro, who shared her top tips for keeping your finances straight when running your own freelance copywriting business.
Your Turn! Have you opened a business bank account? Why or why not?
Last Updated on January 19, 2023
I have three questions…
1) When you say, “If you’re accepting payments via PayPal, you’ll want one account for your personal transactions and one for your professional transactions,” does that mean that once I open a PayPal Business Account, I *MUST* ALSO create a personal account in order to do business more effectively?
2) When it comes to charging clients through PayPal, are most people okay with you building in the 2.9% + $0.30 processing fee into your rate? I want to do this but I’m afraid it might turn away clients once I launch soon.
3) Lastly, how can I deduct the costs of setting up my business BEFORE it launched? I used my own personal debit card to purchase my web domain, hosting, etc and I’m not sure how to factor in these costs in order to save on the taxes I’ll eventually pay. (I’ve never paid taxes before as this is my first real job.)
Thanks SO much in advance!
Kate Sitarz says
First – definitely talk with an accountant. That said:
1. If you’re going to use PayPal for personal purposes, then it is easier to have a separate, personal account for personal purchases (i.e. clothing) vs. one you’re using for business purchases (client payments, office supplies). But you also don’t have to use PayPal at all if you don’t want.
2. Simply build it into your rate. You don’t have to separate it out as its own line item.
3. Keep any receipts related to business purchases and maintain a list of all transactions (date, what it was, etc.) that were business expenses. Then, come tax time, you’ll be able to enter them in or give them to your accountant so they can help you. 🙂
Hope that helps!
Thanks SO much. That definitely helped. 🙂