Something I preach all of the time is, you should always have at least one back up bank account. Truth be told, you should have at least three separate checking accounts at three different financial institutions.
The reason for doing this is quite simple. You never want to leave all of your money in the same place. It's the old phrase, never leave all of your eggs in the same basket.
Also, while I'm at it, never have your personal bank account/s at the same place you hold your business accounts. I'll get to the reasoning another time. Please trust me for now.
Let me give you an example of one way to protect yourself from outside forces hurting your business. Let's say you're in the high-risk space. You sell something online like CBD Oil or Kratom. You get accepted to process credit cards. That merchant salesman or the processor promises you the world. After giving them access to your banking information, immediately open a backup account. It needs to be an account at a different bank that no one has access to but you.
As you receive deposits into bank number one, begin to transfer the funds over to bank number two. If times get tough and anyone decides to go after your account, they will go after account number one. That is the one they have on file. If account number one gets shut down for any reason, you will already have a place to go that is ready and seasoned. Shield it from view by keeping it to yourself and at another financial institution.
Just for clarity, anytime I say another financial institution, I do not mean the same bank name at another branch. I mean a completely different bank. I apologize if I come across repetitive. I want to make 100% clear how important keeping separate accounts is in business.
If you are accepting echeck or ACH, backup accounts are an absolute must. Banks are fast to shut down accounts from returns. They are also known to shut down accounts just because they don't like the type of business. I've seen bank accounts that get shut down because of a single returned item. Most banks now use software that calculates risk automatically. If a red flag goes up, the system shuts your account down. No manager will help you, and no cousin will fix the problem. There will be no explanation or remorse. Banks love you when you come in the door, and they will gladly kick you in the rear on the way out. Always be ready to move over your affairs to a backup account instantly.
Thanks for reading. If you like this or any of my other articles, please make sure and share them on social media.
-Lonnie Passoff
Founder and President
Green Payment Processing
About the Author:
Lonnie Passoff started the first-ever internet-only electronic check processing firm in 2008. It has grown to be the largest e-check processor on the planet. A veteran of the United States Army, he has become a multi-millionaire through honest, smart business practices. He frequently speaks at business conventions and is a paid advisor to multiple corporations. He also holds a seat on the board of breast cancer non-profit, as well as a clean ocean initiative in the Caribbean.
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