How necessary is a bank account for self-funded searchers?

November 15, 2024

by a searcher in Chicago, IL, USA

Hi searchers,

I officially started my self-funded search recently, and I've got a few minor expenses (things like business cards, website, etc.). I anticipate that my currently self-funded search will require an SBA loan, investor equity, my own equity injection, and a seller note to finance.

I'm planning to fund my search through my personal funds, but I recently realized that I may need to open a bank account - but as long as I'm tracking my relatively few expenses manually I'm not sure if it's an outright necessity. Do we think it's wise (or even necessary) to open a bank account for my LLC?

Thanks!

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Reply by an member
from United States Military Academy in Charlotte, NC, USA

I recommend you create a business account for several reasons: lenders use it to verify capital injection/handle loan dispursements, investors want clear separation of finances (signals professionalism), keeps your expenses organized, and your LLC will maintain legal liability protection.

Reply by a searcher
from University of Virginia in Simi Valley, CA, USA

Service providers, lawyers, and CPAs will tell you to incorporate and open a banking account. They will scare you with personal liability and taxes. They will offer to help for a fee. But you don't need to do so. All you need is to keep the confidential information to yourself when you sign NDAs and keep good records - scan receipts/invoices, document and classify expenses, etc., in case you need this info later. For NDAs, if you are afraid of missing something when reading them, which you should do for everything you sign, you can explain to ChatGPT your situation and ask to analyze and identify any unusual and not customary clauses in an NDA (remember to remove identifiable info from your documents before uploading them to ChatGPT). For recordkeeping, you can use www.monarchmoney.com (I am not affiliated with them, just a happy user) or similar to track all transactions and mark them as personal or business. If your goal is to buy a business, focus on buying a business. The rest is just noise.

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