Accounts opened for the purpose of conducting transactions for a business ought to be established as business accounts. There is simply no cogent argument I can think of for knowingly categorizing a sole proprietorship's account as a personal account.
- Your bank's CIP and due diligence procedures are different for personal and business accounts and it's likely that your transaction monitoring procedures differ, too.
- Business accounts are not subject to Truth in Savings (Regulation DD) or Electronic Fund Transfer Act (Regulation E) coverage; personal accounts are.
- Your bank's service charge and account analysis policies are compromised when a business's banking is done through a personal account.
- Basing your account categorization in the type of taxpayer identification number used is a red herring. Social Security numbers can be used as the correct TIN for Limited Liability Companies under the right circumstances, yet no one is arguing that an LLC's account should be carried in the personal accounts portfolio.
First published on BankersOnline.com 8/30/10