Business Checking advice needed

Discussion in 'Credit Talk' started by smallbiz, Aug 16, 2001.

  1. smallbiz

    smallbiz Member

    Hi, all.

    I need some advice and I hope someone here might be able to give some. I started working from home (I am a single mom) about 3 years ago after my divorce. At first I had only a few clients (associates from previous work expreiences), but now my business has grown substantially. The problem is that due to a three and a half year old Chexsystems report, I cannot open a checking account for myself or my business.

    At first this was not a problem because my clients were people I knew personally and I asked them to make their checks out to me. I would just go to their individual banks and cash them. Now, however, I have hundreds of clients and they make their checks out to my business. I can't ask them to make the checks out to me because part of the reason for my success has been my ability to come across in the professional world as a much bigger business than I really am (although I am quickly getting as big as I appear to be). I have always been extremely professional in my business so as to avoid appearing "cheesy" (for lack of a better word), and that hard-earned credibility could be damaged if I had to explain to clients why they cannot make their checks out to the business.

    There is one possible option, but I wanted to get some input on it. My mother is open to the idea of opening an account in my buiness name, but she is wary of how that could affect her tax liability. If we did this, I would only deposit my checks into the account and then cash them out, so nothing would sit in the account. I would continue to operate on a cash basis as I have been, in reality, until this Chex thing goes away.

    Does anyone have any advice as to how to be sure she wouldn't be liable for taxes on this money? If all checks were written to me, and I cashed them and claimed all of that income on my taxes, would she still be liable for it? If we did that and the IRS questioned it at any point, wouldn't it be okay to just be up-front with them about what we did (that it's really all my money and I did in fact claim it all)? Or does anyone have any ideas about a better way to do this? I can't simply let my business go because I can't cash the checks!

    Please respond if you have any ideas at all. I really appreciate all input!
  2. Marie

    Marie Well-Known Member

    Well, I'd hammer Chex and try to get it cleaned.

    Bank of America, I believe, will touch you if it's been 3 years...

    DO NOT put the account in another person's name.

    I have a friend who did that with her boyfriend and it gave him 2 years of tax hell and liability for a company's taxes when he wasn't involved in the company at all...

    Past that... if BofA won't do it... I'd try going into local savings and loans and try talking with the manager.

    I've talked my way into things my credit score didn't support at the time... why not a checking account :_)

    You could take info (financial statements) showing how well you're doing.

    remember, they're in business to make money and if your credit is reasonable you're still a good prospect with them.. even with the Chex thing in the background.
  3. smallbiz

    smallbiz Member

    I actually tried B of A and you're right; they will disregard the Chex item as it is over three years old. The problem is, my credit wasn't good enough (remember I'd just gone through a divorce right around the time of the Chex entry). B of A now requires that you have a certain credit score to open any kind of checking account.

    I did speak briefly to a couple of bank managers. Because my credit isn't good, it's hard for them to overlook the Chex thing. They told me that they wouldn't have overlooked it, anyway, there their policies are absolute on the Chex thing, but I don't believe them. I think if my credit had been good I could have gotten them to work with me. Anyhow, because I have been dealing only in cash, there isn't much to show them in the way of financial statements (nothing I couldn't have just made up, anyway, so it doesn't appear very credible). Because I have been dealing strictly in cash with no credit or bank account for several years, there is really nothing to show anyone that isn't just my word. After going over this with a couple of banks I just got discouraged and gave up the idea of opening my own account.

    Why did you suggest savings and loans? Do they operate differently than banks with regard to opening accounts?
  4. tessmcgill

    tessmcgill Well-Known Member

    I am in the same boat. Try one of the following online banks: (Although you would have to mail or FedEx deposits, at least you would have an account)

    I've opened personal checking accounts with Usabancshares and TD Waterhouse although I have two items on Chex.

    *Not sure which ones have business checking - you'll have to check their web sites.
    (will open a brokerage account with 2,000 minimum)

    Try these banks, however, some may use Chex - or your Equifax credit report.
  5. Marie

    Marie Well-Known Member

    How about this.

    Will Bank of America open a savings account for you???

    If so, open the savings.

    Then change it to money market savings (you get checks)...

    Use it like a checking account.

    THEN... do over 6 withdrawals every month for a couple of months and you'll get a warning of activity... then they'll change your account to checking (there are federal withdrawal guidelines for money market accounts and they're required to change you to checking if you violate the 6 w/ds per month thing several months in a row...)

    That's what they did to my very old savings account and it ticked me off b/c I didn't want a checking account... :)

    THe flip side is you might get it closed if you have ave credit... so I'm doing this as a suggestion...

    I'd still try for a savings to prove yourself and you can then switch it (on the phone or at another branch later) to a money market w/checks. You really can't tell the difference except for the limit on withdrawals.

    Oh, some savings and loans will work with you. I'd start calling around and tell them where you stand...

    Persistence is the key. TD waterhouse also opened a checking account for me when I was still on chex... but it was a personal acccount.
  6. tessmcgill

    tessmcgill Well-Known Member

    A caveat about Bank of America (BOA)

    Although they have relaxed their Chex system requirements, they still pull a combined 3-bureau report. If you have negative entries in the last 36 months, they may not open the account.

    I tried the branch in Dallas, and was told this by one of their personal banking representatives.

    Your best bet is a smaller bank (if you opt not to try one of the online options). The larger banks are more rigid in their guidelines.

    Also, look for a small local bank that has just opened. Often, a new bank is eager to bring in new customers - and will "broaden the customer base" for new accounts.

    Good Luck!
  7. smallbiz

    smallbiz Member

    Actually, for what it's worth, B of A may have different rules in different states, because I am in Arizona and they only pulled Experian and not all three. I know this because I sat right there while he pulled it and then gave me the rejection letter so I could go get my free copy of my Experian report. We talked about which bureau it was he'd pulled so I could get the report.

    Also, I did try the smaller banks with no luck. One of them actually sat and talked with me and told me that it's a myth that smaller banks have less stringent rules. She told me that because they were a smaller bank, they had to have *more* strict guidelines because they couldn't afford the potential risks.

    What really irritates me about the Chex thing is that it is paid and I don't understand why banks are as strict as they are with a paid entry. It seems it's a lot easier to get "second chances" with credit than with a simple little checking account. But I digress. ;)

    GEORGE Well-Known Member

    Also, I did try the smaller banks with no luck. One of them actually sat and talked with
    me and told me that it's a myth that smaller banks have less stringent rules. She told
    me that because they were a smaller bank, they had to have *more* strict guidelines
    because they couldn't afford the potential risks.

    SIMMONS BANK IN ARKANSAS, kept my wife at $1,000 for ever...she asked for a credit line increase...

  9. smallbiz

    smallbiz Member

    Since the alternatives seem to be exhausted, does anyone have any further advice or opinions as to the ramifications of having my mother open the business account for me?
  10. creditwork

    creditwork Well-Known Member

    I don't know how your business is setup. CreditWorks, LLC is a limited liability corporation. I own 1%, my sister owns 50% and my wife owns 49%. You can make your mother a 1% owner and her tax implications would be limited. You can make her a silent partner, no interest in the business. I would consult and accountant as to the best way to set your business up to avoid tax complications and still have someone participate in the business to help with the account.
  11. Cyprigirl

    Cyprigirl Well-Known Member


    Why don't you dispute the Chex Systems, I have read here on the board that others have had success disputing an item, and if its been over three years and its paid , its mostly likely to come back unverified.

    Which bank put you in Chex Systems?

    I would also get busy on the credit report and start disputing items.

    Just my 2 cents!

  12. Concerned

    Concerned Well-Known Member

    I was in the same exact position as you. This is what I did.

    I scoured the web to find banks that do not look at Chex Systems. I found one near me that is big (lots of branches) and really nice.

    If you have not already done so go to this site and do independent searching on your own.

    When I opened both my personal and small business accounts I deposited $5000 dollars into each to show I was a serious customer so no credit check was triggered. They did check another system that was not Chex. I can't remember the name.
  13. freedom

    freedom Member

    i can offer you this info.

    i am in texas, not sure where you are, but some will apply.

    you do not need a checking account to have a business, but it can be helpfull.
    i cash checks for people who do not won't to run them through their account, for obviose reasons.
    the check is made out to their business, they endorse the check with the business name then sign their name under that.
    if there were a check cashier in your area you could work up a good relation with, this would work.
    i charge 2% for this service some charge 1%.

    Some businesses have to do this because of cash flow problems ie to meet payrolls. the banks may hold their checks for up to 10 days before giving them credit for it.

    now if there are any small banks in your area they can open an account no matter what. the big banks could also,but they are big enough they don,t need to deal with the small business.

    you could have your mom get a dba and open the account. set the account up to have 2 signatures yours and your moms. get a rubber stamp for her signature then draw a sale agreement between you and her stating you have bought her out, have it recorded at your court house and then shes out of the loop.

    good luck

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