Business Bank Account vs Personal Bank Account

What is the best practice when opening up a business bank account for a business that I anticipate to be worth more than $250,000. Does the FDIC insure amounts more than this for business accounts? Or should I open multiple bank accounts? When you look at companies like Google, Airbnb, Facebook, and Paypal, how are they handling these types of things?

One thought on “Business Bank Account vs Personal Bank Account

  1. mhoran_psprep

    Yes a [business has $250,000 of FDIC coverage][FDIC]. But make sure that the corporation is recognized as being a separate entity from the owner, or it can be mixed in with the personal accounts, and not have as much coverage as you expect.

    A corporation, partnership, or unincorporated association must be
    separately organized under state law and operate primarily for some
    purpose other than to increase deposit insurance coverage.

    All deposits owned by a corporation, partnership, or unincorporated
    association at the same bank are added together and insured up to
    $250,000, separately from the personal accounts of the owners or

    So if you must have more than $250K in the bank, you can have accounts in multiple banks.

    For a company to be worth $250,000 that doesn’t mean that they have $250,000 in the bank.

    The worth of the company includes the equipment and other property they have. A pizza place has a significant amount of money tied up in equipment and inventory. A small delivery company has vans and a warehouse. A web development company has invested in computers, servers, licenses and the like.

    The worth of a small business can also be related to their location, customer base, and existing contracts. Somebody purchasing that business takes those things into account.

    When a company has to have money in the bank to prepare for an expansion of that business: for example opening a second location, or adding additional staff; they can invest in US treasury securities. These pay better than a regular bank account, and are extremely safe.

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