Freelance Writer: Separate Bank Account?

Does your freelance writing business need a separate bank account?
Does your freelance writing business need a separate bank account?. Getty Images/The Image Bank/Art Partner Images

Dear Freelance Writing, 

I've been freelance writing for approximately six months now. I see that you seem to highly recommend organizing my freelance writing career as a business. I'm looking into establishing an LLC and website, but I'm wondering: Do I need a separate bank account? If so, why? (It is such a pain!) How do I go about getting one? ~Anna B.

Anna, 

First and foremost, I'm glad that you're setting up your freelance writing as a business.

You're likely doing this because of the professional aspect it conveys to potential clients--and that's good; they certainly do tend to be drawn to sleek, professional writers who have their ducks in a row. And who can blame them? A writer who has their career together is probably most likely to give them excellent service and a polished product, right?

But, there's another positive aspect to setting up your freelance writing as a business ... actually, three aspects:

  1. Doing this separates your personal life and personal money from that of the business. Specifically, you can do business without the worry of being sued for your family's home and car. If something goes wrong with your business, your personal belongings are not considered part of the business, and therefore are protected.
  2. Along these same lines, you can hire employees or contractors knowing they won't be able to come after your personal savings account in the event that they find some fault with you as an employer.
  1. Lastly, doing so also has tax advantages. I'm not a tax professional; so be sure to get the help of an expert in this area. A professional will be able to explain the tax differences between operating as a business and operating as an individual.
     

So, with these three advantages established, you should know that you cannot adequately claim or support this separation of personal and professional without a separate bank account.

In addition, as you set up your writing as a business, you'll find that your checks are more and more often made out to your business name, instead of your own name. Your personal bank may be a little reticent in accepting funds that aren't in your given name.

Bank Account for Your Freelance Writing Business

Once you've decided to open  a separate bank account, you'll need to gather some paperwork before undertaking the errand. Most banks will want some specific documents that establish your business. In my state, these were:

  1. Assignment of my business' EIN number from the Federal government.
  2. State paperwork showing the establishment of my LLC.
  3. Personal identification on my part. 

With your documents lined up, start shopping around for a business bank account that meets your needs. I recently left a bank that charged my business $12 per month for the account. I went to a bank that offered me a $300 bonus for switching! That made the paperwork and multiple visits a little easier to take.

As you can see, opening the bank account is one of the last steps in establishing your freelance writing business. However, I would personally view it as one of the most important steps, and definitely recommend you get started right away!

Thanks for the great question. 

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