Do I Need A Business Checking Account For Payment Processing?

Yes, a checking account is needed, and it must match the business name used for the account. While no license or permit is required to accept credit card payments from customers, there are a number of things you should be mindful of, particularly if your business has been incorporated with a name which is not the same as yours. The first thing you must do is establish a business bank account.

Setting up a Business Bank Account

Merchants that operate their businesses under their names may ask their customers to pay their checks directly to them, depositing the money into a personal checking account. However, merchants who have incorporated their businesses will need to establish a business checking account, this way they can deposit checks that have been made out to their company. Next, you must get a tax identification number.

Business accounts require you to get a tax ID number, which can only be provided by the IRS. After the IRS has provided you with the number, you will then need to get a tax ID from the state where you plan to run your business. Getting federal tax ID numbers will require the SS-4 form of the IRS to be completed. After you send in your application, which can be faxed or mailed, the IRS will provide you the number within three weeks. When opening a business checking account, the bank will also require you to provide them with your articles of corporation as well as the corporate seal.

Obtain a Fictitious Name

Some merchants will choose to be sole proprietors while conducting business under a different name. In this case, they will need to register their fictitious name in the area where they intend to operate their business. This is mandatory in order for a business account to be opened. In most states, you will be required to go to the county office and pay a fee for registration. However, some states will instead require you to put a notice in the local newspaper. Registering a fictitious name will range in price from as little as $10 to about $100. It is not necessary in most states for corporations to register for fictitious names unless they operate under one different from their own.

Establishing a Merchant Account

Merchants that wish to accept payments by credit card will need to set up a merchant account. This account is different from both your personal and business account, and serves as an intermediary between the POS and your personal account. Merchants will also need a method for processing credit card payments. Merchant accounts require fees to keep open, and these will usually be assessed monthly.

Merchants will also be charged a discount rate per transaction, and this rate will depend on numerous factors, including sales volume, the amount of risk your business represents and whether the credit card payments are made online or at a card terminal. There are many merchant providers to choose from, so it is important for merchants to do their research.