Business Banking and Bookkeeping

Setting Up the Money Side Right

YYou can have the LLC filed, the NAICS code sorted, the license squared away, and the liability coverage in place, and still be running the whole thing out of the same checking account you’ve had since you were nineteen. This is the step that gets skipped most often, because unlike the others, nothing forces the issue. No state agency shows up to catch you mixing personal and business money the way they’d catch you working without a license. The problem is that skipping it quietly undoes a chunk of the protection everything else was supposed to buy you.

Short version: Open a dedicated business bank account and run every dollar of business money through it, mixing personal and business funds is the single most common way small LLC owners lose the liability protection they thought they had. Bring your EIN, formation documents, and ID to open the account, expect the bank to ask who owns 25% or more of the business regardless of where federal reporting rules currently stand, then build simple, consistent bookkeeping and a real way to take card payments on top of that foundation.

Why the Business Account Isn’t Optional

A single-member LLC is taxed as what the IRS calls a “disregarded entity,” meaning your business income just flows onto your personal tax return instead of a separate business return. A lot of people read that and conclude the business and their personal finances are basically the same thing anyway, so a separate account is just paperwork for paperwork’s sake. That’s the misconception that gets people in trouble.

The tax treatment and the legal treatment are two different things. Legally, your LLC is still a separate entity, and that separation is exactly what stands between a lawsuit against your business and your personal house, truck, and savings. Courts have a name for what happens when that separation stops being real: piercing the corporate veil. When a court does this, it disregards the LLC entirely and lets a creditor or a plaintiff go after your personal assets as if the LLC never existed.

Commingling funds, mixing personal and business money in the same account, is the single most common piece of evidence used to argue an LLC is a sham. One frequently cited case involved a solely-owned construction company where the owner used the business account for personal purchases at jewelry stores, restaurants, and car services, while the company itself had no real operating funds of its own. A court pierced the veil and held her personally liable. Single-member LLCs draw more scrutiny on this than multi-member ones, precisely because there’s only one person making every decision, so it’s easier for a court to conclude the business and the owner were never really separate at all.

None of this requires fraud to go wrong. Depositing a client’s check into your personal account because it’s more convenient, or paying a personal bill out of the business account because the cash happens to be sitting there, is enough on its own to build the pattern.

What the Bank Will Actually Ask For

Opening the account itself is the easy part once you have the paperwork gathered, but showing up without it is the single biggest reason this step drags out for weeks. Have these ready:

• EIN confirmation letter (CP-575). The IRS document showing your Employer Identification Number. Banks will not open a business account on your Social Security number alone, and getting the EIN itself is always free directly from the IRS, never pay a third party for this.
• Articles of Organization (or Certificate of Formation). The stamped document from your state proving the LLC is actually registered.
• Operating Agreement. Even as a single-member LLC where your state doesn’t require one, most banks want to see it anyway, since it’s what proves you’re authorized to open and sign on behalf of the LLC.
• Government-issued photo ID for every signer on the account.
• Business address. If you set up a registered agent or virtual mailbox rather than using your home address, that’s covered in the business address and registered agent guide.
• Proof of license, if your trade requires one. Covered in the licenses, permits, and certifications guide.

One more thing the bank will almost certainly ask for: beneficial ownership information, meaning identification for anyone who owns 25% or more of the business. This is a standard bank rule under longstanding anti-money-laundering regulation, and it’s separate from the federal BOI/Corporate Transparency Act reporting fight covered in the going independent guide. That federal reporting requirement to FinCEN has been paused for domestic LLCs as of this writing, but your bank’s own KYC question predates that fight entirely and isn’t affected by it either way.

The Business Credit Card Question

Once the account’s open, a business credit card is often the natural next step, both for keeping expenses cleanly separated and for starting to build a credit history that belongs to the business rather than to you personally. That’s its own full topic and already covered in depth in building business credit separate from personal and the right order to build business credit, so it isn’t repeated here. The short version is that it belongs after the bank account, not before it.

Bookkeeping: Spreadsheet, Free Software, or Paid Software

Nobody needs enterprise accounting software to run a one-person trade business. What you actually need is something that reliably answers “what did I make, what did I spend, and what do I owe” without turning into a chore you avoid.

A spreadsheet is a genuinely fine answer for a low-transaction-volume solo operation. It costs nothing, and if you’re disciplined about entering things weekly, it does the job. The tradeoff is no automatic bank feed, everything’s manual, and it gets tedious fast once transaction volume picks up.

Wave is the name most people hear first, and its reputation as “the free one” is a little outdated now. Core invoicing and basic income/expense tracking are still genuinely free. But as of 2025, automatic bank transaction import moved behind a paid $19/month Pro tier, and the free Starter plan is limited to a single user with no bank connection. It’s still a reasonable free option, just not the everything-free tool its old reputation suggests.

QuickBooks Solopreneur is the current paid option, running roughly $20/month. If you’ve seen “QuickBooks Self-Employed” recommended somewhere, that product doesn’t exist anymore, Intuit discontinued it and replaced it with Solopreneur. It adds mileage tracking and quarterly estimated tax calculations that neither Wave nor a spreadsheet handle automatically.

Realistic path: start with a spreadsheet or Wave’s free tier while the business is small. Upgrade to paid software only once manually reconciling the bank account has become an actual time cost, not before you’ve even tested whether it will be.

How You Actually Collect the Money

This is separate from payment terms, when something’s due, deposit size, and so on, which is covered in the contracts and getting paid guide. This is strictly about the physical mechanics of how the money moves from the client’s account into yours.

Cash and checks still work and cost nothing to accept, but a growing share of clients expect to be able to pay by card, especially for anything beyond a small cash job. Square is a solid fit for trades work specifically because most of the payment happens in person, at the job site, on the truck, at the door. Current rates on Square’s free plan: 2.6% + $0.15 for a tapped, dipped, or swiped card in person, 3.3% + $0.30 for an online or invoiced card payment, and 3.5% + $0.15 for a manually keyed card where the physical card isn’t present. For a large invoice, an ACH bank transfer runs just 1% (with a small minimum), meaningfully cheaper than a card if the client’s comfortable paying that way.

You may have seen posts warning that every Venmo or Zelle payment over $600 was about to get reported to the IRS. That specific fear is out of date, the $600 threshold was part of a 2021 law that got delayed repeatedly and was then formally repealed by the One Big Beautiful Bill Act in July 2025. The federal reporting threshold is back to $20,000 and 200 transactions a year, though a handful of states still set their own lower bar.

That said, the tax-reporting angle was never really the strongest reason to avoid running business money through a personal Venmo or Zelle. The real issue is the one covered earlier in this guide: routing business payments through a personal account, even one with a “business” toggle switched on, is the same commingling problem in a different outfit. Zelle in particular moves money bank-to-bank with no transaction record independent of your personal bank statement, which is fine until a dispute or an audit needs a clean paper trail that clearly separates the business from you.

What This Doesn’t Cover

Payment terms, deposit limits, invoicing schedules, and lien waivers are their own subject, covered fully in the contracts and getting paid guide. This one is about where the money physically lands and how it’s tracked once it does, not when it’s owed or how you protect your right to collect it.

Sources

• https://www.wolterskluwer.com/en/expert-insights/piercing-the-veil-of-small-business-what-the-owners-of-llcs-and-corporations-need-to-know
• https://nchinc.com/blog/business-credit/what-happens-if-you-mix-business-and-personal-finances-in-an-llc/
• https://easyb.org/business-bank-account-requirements-checklist/
• https://delivvo.io/blog/quickbooks-self-employed-replacement-2026
• https://buyersprint.com/2026/05/05/quickbooks-vs-wave-accounting-2026/
• https://www.tabservice.com/blog/form-1099-k-reporting-requirements/
• https://merchantinsiders.com/blogs/square-fees/