I have been a sole proprietor for the last sixteen years. We have been at our new location for five years. I have been depositing checks made out to my company's name into my personal account. Now the bank is saying that I have to open a business checking account. I don't want to have two accounts. Is there a law that lets them do this to a sole proprietor?
There's no law that specifically allows it, and there's no law that says it cannot be done, either. More and more banks that were allowing sole proprietors to deposit business receipts into personal accounts are now requiring that separate business accounts be opened. Many banks that have long-standing practices of requiring that businesses use business accounts often identify businesses that have been using personal accounts and require those accounts to be converted.
The reasons? There are two that are most often given. First, bankers say that the services they provide to businesses -- night deposit handling, cash management, currency and coin orders, etc., are more efficiently delivered in connection with business accounts. The second reason is economic. Business transactions are inherently more expensive to provide than household transactions (more deposits, more deposited checks, etc.), and the fee schedules attached to personal accounts simply are not designed to cover the higher business account costs.
Finally, as your business gets more and more successful, it simply is "better business" to segregate your personal transactions from those of your business. That makes it easier to take care of tax reporting, etc. That's probably not on your bank's list of reasons to ask you to open the business account, but it can be a positive result of doing so.
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There's no law that specifically allows it, and there's no law that says it cannot be done, either. More and more banks that were allowing sole proprietors to deposit business receipts into personal accounts are now requiring that separate business accounts be opened. Many banks that have long-standing practices of requiring that businesses use business accounts often identify businesses that have been using personal accounts and require those accounts to be converted.