can a sole owner have a DBA account when the DBA name is incorporated - can interest be earned if the corporation TIN is used for reporting the account interest earned?

How can a sole proprietorship be a corporation? I don't believe you can have both. That is why a DBA (sole proprietor) can use the owners TIN, but a corporation will have its own TIN. It is the EIN of the corporation. A DBA (sole proprietor) owns the funds.

For the interest, it is Regulation D that governs the compliance. Individuals, including deposits used by a sole proprietor or one doing business under a trade name, may maintain a NOW account in the individual's name. A corporation can earn interest credit to be applied against their expense analysis.

Hope this helps

Opinions are mine not my employer. no legal advice intended.

First, let's understand that "DBA" does not equate with Sole Proprietor or Sole Proprietorship (SP). DBA means "doing business as" and can be used by any business form if it is using a fictitious name. So "Doctors Associates, Inc." does business as "Subway."

Second, I'm assuming from your post that your reference to a "DBA account" is really to an SP account. The use of the term "DBA account" is a misnomer.

Third, there are corporations that are owned by a sole owner. Good examples might be the local doctor, who might have a "PC" tacked to the end of his practice's name. This doctor owns a corporation, and cannot operate that business as an SP. The corporation cannot qualify for a NOW, and it cannot earn interest on DDA.

Fourth, if the good doctor had NOT created a professional corporation to limit his liability or do estate planning or whatever, he could operate his practice as an SP. In that case he could have a NOW and earn interest.

And finally, you can report interest on an SP's account under either the owner's SSN or his EIN. The IRS prefers you use the SSN on SP accounts, but will accept either. Refer to the instructions on form W-9.

To pick up on Maria's comment about corporations receiving credit toward account analysis -- while you may calculate this as you would interest (R * T * P = I), it's not interest for reporting purposes. Don't report it to the IRS. (Most systems will handle this correctly for you.)

John - I really like that post! I may even use it to help out our New Accounts folks.

Thank you so much for your answer- you have been a great help - we are a new small bank and sometimes it is lonesome thinking through customers requests alone - your help is greatly appreciated - I am learning a lot here and always read your reply - thanks again

WARNING: RANT APPROACHING!!!

Without in any way impugning anyone who is trying to learn the answers here or anywhere else, it strikes me as amazing how many front line people are placed in that position by their banks without some basic understanding of the "whys" of what we do. You know, things like --

• Why you have to read a trust document -- and when to call in an attorney to interpret it
• Why DBA really doesn't equate to "sole proprietorship"
• The differences between a POD account naming a minor as beneficiary and an UTMA account.
• The import of joint ownership of a deposit account and how it differs from authorized signers
• Why a sole owner of a corporation isn't the same as a sole proprietor
• Why powers of attorney can bite you in the . . .
• Your favorite "why" here.

I know that sounds arrogant as hell. But it's not meant that way. It's 31 years of experience talking, with more than a little frustration with the state of the business. Guess there will always be job security for trainers, compliance officers, lawyers, and people who run message boards as great as this one!

Long ago in a simpler banking world, I realized that we had better emphasize the "whys" in our training. If our frontline personnel do not understand specifically why they are required to handle a task in a specific way, they will not understand how to handle the myriad of tasks which fall in the grey areas of our banking world. The results of making decisions without understanding why can be very costly.

Brenda, I would kiss you if my wife weren't here, and if it weren't politically incorrect to do so!

Thanks for the "non-impugning" disclaimer and the Rant Warning.

It always amazes me when people don't WANT to know why. One of the biggest arguments I had in a previous job was when I took over a task from another employee, and asked her "where are your source documents". Turns out she was just filling in the blanks the way her predecessor had done it and she didn't know! It isn't just banking John.

John,
If I can add to your rant, especially when it comes to training, the following are MY pet peaves:

1. Management balks at spending $500 on training videos, but thinks nothing of dropping $10,000 in sponsoring a golf tournament.

2. Resistance to sending people to any type of centralized training area ..."Oh, that means they'll be out of the branch."

3. When you offer to take training around to the branches, you find out that there is NEVER a good time to conduct said training (appointments, customer calls, various and sundry crises.)

4. When you suggest you will send a video around, the response is "How long is the video?" If it's longer than 10 minutes, then the video is "Too long."

5. A seeming fantasy on the part of management that there exists a magic training "pill" or "shot" - i.e. something you only need to inject once, and your staff will retain perfect knowledge on the subject for eternity.

(BTW - I guess I'm too lazy for html coding or I would have prefaced this with a RANT warning!)

We'll just consider that it's a continuing, participative, rant!

And the comment above about it not being "just banking" is right on target. We have thrown so much technology at jobs in the name of better customer service or whatever goal, and we now fail to train people in the basics.

The most obvious example in the non-banking world: cash registers that calculate the customer's change have given us a generation that couldn't count change back accurately if their lives depended on it!

I just had to jump in on this one. Usually I'm just a lurker on this site, learning as much as I can. =) I'm a trainer of front line employees and we're faced with a few problems:

1. The branches need their new employees ASAP, doesn't matter what they know. Just get their tushes in the seats, so to speak.

2. We teach them the rules and once they get to their offices, they learn the other way. (would you believe someone actually issued a bank check to "Bob")

3. Everyone's favorite training video has to do with cheese, not compliance or regs or a how-to.....

Hey John....your comments above aren't close to arrogant, they are right on track but you're living in the wrong world...it's SALES SALES SALES!! (nil desperandum, friend)

Thanks, Christina, and don't worry! It's Friday (really!) and my whole outlook has improved. And don't give up on that training thing.

I need to go back to the original topic of this post for a minute and ask a few questions. I didn't see them answered elsewhere. I have a business of "Barb's Bagels" and want to open a bank account.

1. Does it have to be a business account or can it be a personal account? Is there any legal reason for either answer?

2. If I want to have a Overdraft Protection, can I use a personal line of credit or a savings account (assuming they are both offered by my bank)?
3. Are the answers to either of these based upon whether or not I'm using an EIN or my SSN?

There is no legal difference between a personal and a business account (other than ownership). We all offer accounts packaged based on certain expectations. On personal accounts, we expect that you will deposit each payday and write a relatively small number of checks. You have no NEED for a month-end statement.

On businesses, the CPA (or bookkeeper, etc.) expects a deposit for each day that balances to the "register" tape. A month-end statement is also expected to match with accounting cycles. If the activity warrants it, we may want to analyze (account analysis) your relationship and possibly assess fees for currency deposited, redeposited checks, etc.

Presuming your dba is a proprietorship, the proprietorship is not a legal entity (for contracts- disclosures and Reg DD are a different issue). It is merely your "alter-ego". Unless you have employees, you are not required to have an EIN. Even with an EIN, you business income is reported in your personal tax return, which is SSN based.

There is no legal reason you cannot use your personal line of credit or savings account. However, the credit or account agreement might not allow the mixing of business and personal.

Al,

I just forwarded your explanation to our training department. That's the simplest, clearest explanation of DBA's that I've ever read. Thanks!