Your Business needs a Bank

Often when you're starting up a new business it       doesn't seem practical or necessary to open a new bank account especially if you're not making much money and are using your own cash building the business.

But if you are serious and want the IRS to be serious too, you'll want to open a separate business account.  The Internal Revenue Service recognizes a business as a business rather than a hobby if you have a separate business bank account, business cards, and a well-maintained set of business records.

The IRS is very tough about showing that your business is actually a business and not a hobby.  Basically, you have to show a profit on your IRS Schedule C three years out of every five.  If you have losses that you deduct from your income three consecutive years, then the IRS may decide you are conducting a "hobby business" which would impact the deductions you took on your personal tax return too.  You may owe more taxes after your income is restated...worse than a bad hair day!

But there are many businesses like Amazon, that started in 1994, and didn't turn a profit until 2001 and, because the intention was always there, were not a target for an IRS audit. So don't stress losses as long as you back them up and you have the receipts and bills to back up your expenses.

 Of course, you'll want to appear professional.  It's much classier to have your clients and customers write a check made out to your business instead of you....no eye rolls or weird looks,  then either.   Serious business owners have all the tools they need and a bank account is a must-have for your toolkit.

Bank regulations now require State and/or Federal licenses and registrations, 
especially if you are an C or S corporation, to open an account.  Before you
head off to bank, make copies of your documents and you'll feel so proud
leaving with your brand new bank account....now you're legit.