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  • business checking account for locums?

    Starting to do some locums work as a hospitalist and opened up a LLC. I also want to open up a new checking account to make my taxes easier to separate from my W2 account. Do I need to open up a business checking account vs a personal checking account? If so, any recommendations for a low fee business checking account? Thanks for your help!

  • #2
    I don't have a suggestion for a low-fee account, but the bank where you open the account will probably stipulate whether you should open business or personal. For your own purposes, it doesn't really matter. You are making the correct choice in running your business through a separate bank account, though. I suggest you also get an EIN. You can do so online here.

    You didn't ask about this, but I see no need for a separate business credit card unless you have a reason for doing so. Just keep track of receipts and pay the total business charges from your business checking and the personal charges from your personal checking.

    Welcome to the forum!
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      The only reason for a business credit card. Is that the more distance you maintain from your personal finances and business operation and finances. The harder it is to pierce the "corporate veil".

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      • #4
        We use Everbank for online business checking.  Most of the other online banks (ally, etc) do not allow business accounts.  Interest rates are not as good as personal accounts but better than the local banks.

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        • #5




          The only reason for a business credit card. Is that the more distance you maintain from your personal finances and business operation and finances. The harder it is to pierce the “corporate veil”.
          Click to expand...


          That is a good point. Not what I practice, but a good point.
          Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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          • #6
            Newbie to this and will be doing locums full time coming out of residency. Created an LLC and opening a business checking account for my jobs to deposit. My question is, when I need money for personal expenses like rent, food, etc. do I transfer that money to my personal account? And then purchases that are deductible I make with my business checking/credit card?

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            • #7




              Newbie to this and will be doing locums full time coming out of residency. Created an LLC and opening a business checking account for my jobs to deposit. My question is, when I need money for personal expenses like rent, food, etc. do I transfer that money to my personal account? And then purchases that are deductible I make with my business checking/credit card?
              Click to expand...


              Yes, best for you to keep business and personal separate as much as possible. I'd go so far as to recommend you budget a weekly/monthly amount to transfer from your business account to your personal account, similar to a salary (but called a "distribution" for your LLC).

              Business purchases should be paid for from your business account. This will allow your CPA to review only that account's transactions for preparation of your tax return and to help with ongoing, intra-year planning and projections.

              There will be times that you need to purchase something for the business and only have personal funds available. In those situations, you should reimburse yourself from the business and use the receipt to document the deductibility of the reimbursement.

              Also, just want to make sure you're not located in CA or doing locums there. LLCs are not a permissible entity for physicians in CA.
              Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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              • #8
                Hmmm, I, too, started locums this year but am a sole proprietor (no LLC or S-Corp).  I haven't started a separate checking account but just have one account for business and personal.  Is it necessary to have a separate one?  I know it keep things 'clean and clear' come tax time, but I'm diligent about keeping receipts and the incoming payment from hosp is clearly marked as such on the account.  Would you still recommend getting a separate one?

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                • #9




                  Hmmm, I, too, started locums this year but am a sole proprietor (no LLC or S-Corp).  I haven’t started a separate checking account but just have one account for business and personal.  Is it necessary to have a separate one?  I know it keep things ‘clean and clear’ come tax time, but I’m diligent about keeping receipts and the incoming payment from hosp is clearly marked as such on the account.  Would you still recommend getting a separate one?
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                  I also operate as a sole proprietor.  I do not have a separate business checking account or credit card - the IRS has no requirement for one to do so, although some people will recommend this.  As a sole proprietor, you are the business and the business is you.  I keep all receipts and make electronic copies of paper receipts and store them both on my PC and an external drive.  Also, my accountant provides me with a very nice spreadsheet on which I categorize and keep track of expenses for each month as I go along.

                  If I had an LLC I would definitely keep things separate.

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                  • #10




                    Hmmm, I, too, started locums this year but am a sole proprietor (no LLC or S-Corp).  I haven’t started a separate checking account but just have one account for business and personal.  Is it necessary to have a separate one?  I know it keep things ‘clean and clear’ come tax time, but I’m diligent about keeping receipts and the incoming payment from hosp is clearly marked as such on the account.  Would you still recommend getting a separate one?
                    Click to expand...


                    That's my personal preference. We don't really care about seeing receipts at tax time - those are for your records only. If you're going to create a spreadsheet for your CPA or list totals of all categories, that will work, but we usually like to double-ck what the client turns in. For example, I like to look for missing check numbers, as it's easy to miss some checks when transferring information. We also cannot reconcile the business bank account to check for errors. It's just not as easy when your funds are commingled. Even better, use QuickBooks to track business income and expenditures.

                    I realize with locums, you have fewer expenses so the above might not apply as much to you. But from a personal budgeting standpoint, it is easier to hold yourself accountable to a certain level of spending when you have a separate account that you are "paying" yourself from.
                    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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                    • #11
                      Interestingly I was advised by my accountant that it's totally fine to run W2 and sole prop/1099 through your checking account, so that's what I do. No EIN or anything. To be fair I'm only doing EM shifts and med mal expert stuff so I'm in no way running a business.

                      I was all ready to set up a whole DBA/separate account scenario and she said not to worry about it.

                      I keep pretty careful track of money and actually do have a different account to stash my s401k contributions/quarterly taxes.

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                      • #12




                        Interestingly I was advised by my accountant that it’s totally fine to run W2 and sole prop/1099 through your checking account, so that’s what I do. No EIN or anything. To be fair I’m only doing EM shifts and med mal expert stuff so I’m in no way running a business.

                        I was all ready to set up a whole DBA/separate account scenario and she said not to worry about it.

                        I keep pretty careful track of money and actually do have a different account to stash my s401k contributions/quarterly taxes.
                        Click to expand...


                        It is totally fine to do that, and I believe Laura provides all of our doc's who have side gigs with an organization schedule to make sure she gets all deductions so nothing slips through the cracks (probably similar to what Dilaudidopenia is referring to).

                        My comments were directed toward wonderwoman422 who is doing locums as a full-time business. WW could mix everything up in a single account, I just don't think it is a good idea for budgeting and cash flow purposes. Plus it does get messy and can be hard to account for all expenses.

                        This thread kind of split from the original question from stingrey in January about doing this part time and opening a business or personal checking account for tracking.
                        Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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                        • #13
                          yeah makes sense.

                          i was actually kind of surprised by her advice, figured well into 5 figures/year she'd have told me to do a separate account

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                          • #14




                            yeah makes sense.

                            i was actually kind of surprised by her advice, figured well into 5 figures/year she’d have told me to do a separate account
                            Click to expand...


                            She has developed a really good system and I believe it works well for the side gig physicians. And, to tell the truth, she's the tax advisor that the doc's work with throughout the year - I review the taxes and hash things out with her whenever she gets stuck on something, but she's very organized and I totally trust her judgment when she works out a process.
                            Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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                            • #15
                              I used her this year - Laura that is- and was quite happy. She helped with all of the fire losses....

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