Doint Business As (DBA)


B

Big John

Need some advice. I am a Texas resident and am considering filing for a
DBA permit (or whatever it/s called) so that I can open a business
account at the bank. I want to do this so that I can easily transfer
funds on line to a commercial account from time to time. What
implications will this have on my personal income tax, i.e. will I have
to file a separate income tax for the DBA account or can I handle it all
under my personal income tax?

Thanks--

Big John
 
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P

Phil Marti

Big John said:
Need some advice. I am a Texas resident and am considering filing for a
DBA permit (or whatever it/s called) so that I can open a business account
at the bank. I want to do this so that I can easily transfer funds on line
to a commercial account from time to time. What implications will this
have on my personal income tax, i.e. will I have to file a separate income
tax for the DBA account or can I handle it all under my personal income
tax?
None of this has any effect on your income tax. Sole proprietors (which is
what you'll be if you start a business) report everything on their 1040's.

I'm without the first clue why you want to do whatever it is you're planning
on doing. You might want to talk to a lawyer.
 
P

Paul Thomas, CPA

Big John said:
Need some advice. I am a Texas resident and am considering
filing for a DBA permit (or whatever it/s called) so that I can open
a business account at the bank. I want to do this so that I can
easily transfer funds on line to a commercial account from time
to time. What implications will this have on my personal income
tax, i.e. will I have to file a separate income tax for the DBA
account or can I handle it all under my personal income tax?



Um......what type of business do you have?

A d/b/a is generally used by people who operate a business under a trade
name.

ie: John Watson d/b/a "Big John's BBQ"

So - what is your business.

Otherwise, I fail to see a valid business reason to open bank accounts that
are not in your name. There's no prohibition that I'm aware of that would
prohibit an individual to transfer funds from an account in the individual's
name into a commercial account in the name (I assume) of the corporate
owner.



If you have a self-employed business operation, you file Schedule C (among
other forms and schedules) to report your business income and claim your
business expenses.



Again, what type of business do you have?





Oh, the bank is going to be leery of the set-up you describe, especially if
you don't have a real business, as it sounds like some kind of financial
crime is involved.
 
B

Big John

Um......what type of business do you have?

A d/b/a is generally used by people who operate a business under a trade
name.

ie: John Watson d/b/a "Big John's BBQ"

So - what is your business.

Otherwise, I fail to see a valid business reason to open bank accounts that
are not in your name. There's no prohibition that I'm aware of that would
prohibit an individual to transfer funds from an account in the individual's
name into a commercial account in the name (I assume) of the corporate
owner.

If you have a self-employed business operation, you file Schedule C (among
other forms and schedules) to report your business income and claim your
business expenses.

Again, what type of business do you have?

Oh, the bank is going to be leery of the set-up you describe, especially if
you don't have a real business, as it sounds like some kind of financial
crime is involved.
OK - the deal is this --

I participate in a LLC which is in the oil business. From time when
additional operating funds are required (drilling costs, etc.). The
corporation would prefer that I transfer these funds (as required)
directly to their corporate account "on line". The bank (Bank America)
will not allow me to transfer funds from my personal account to a
corporate account on line. I can go into the bank and do it but I am not
always in town when they want the funds. Using their "Bill-Pay"
technique works but it takes a minimum of 8 days for the funds to move.
This is unacceptable to the corporation and they felt that paper checks
were to cumbersome.

It was the bank that suggested (one of their employees)that I open a DBA
account and keep enough in it to cover any required transfers. It is now
pretty obvious that this is not a great idea, and old fashioned paper
checks are the answer when I can't get to the Bank to make the transfer
in person!

Thanks for your input-

Big John
 
S

Shyster1040

Why does the bank have such an absurd restriction, particularly since it's
so easy to circumvent, as the bank itself advised you? Have you asked for
an explanation as to why they've imposed such a restriction?
 
B

Big John

Shyster1040 said:
Why does the bank have such an absurd restriction, particularly since it's
so easy to circumvent, as the bank itself advised you? Have you asked for
an explanation as to why they've imposed such a restriction?
Good question. I have asked it repeatedly and have never gotten a good
answer. They just tell me that it's an industry wide rule!! I've checked
another bank a few doors away and got the same answer - mostly a shrug
of the shoulders - that's just the way it is.

I do not plan to pursue it further, as it's not that big of a deal for
me. I'll just write 'em a check and forget it!! I'm sure that someday
someone with a greater vested interested than I have will get it changed!
 
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Shyster1040

Do they apply the same restriction to transfers from an account held by an
LLC as they do to transfers from accounts held by individuals?

E.g., suppose that Big John, LLC wanted to make a large transfer from its
account to another corporate account, would they restrict the transfer or
not?

If not, and if you already have a single-member LLC that you use for other
reasons, you might consider running the transfers through the LLC's
account.
 
S

Shyster1040

I poked around on a couple of bank online banking webpages, and it appears
to be the case that the restriction on online transfers from consumer
accounts is a part of the Nanny-banking rules required for consumer
transactions.

In order to get the ability to make online wire transfers to third
parties, you generally have to open a business banking account rather than
a personal account.

I'm guessing that the idea is that wire transfers from personal accounts
are more likely to be fraudulent, and therefore they want personal
face-to-face confirmation of the transfer order before they're willing to
do it.

I guess the worry is that some hacker will get access to John Doe's
personal savings account and wire the money to RipOffs, Inc., a shell
corporation with no assets that will have conveniently collapsed in on
itself by the time John Doe manages to track it down and sue to get his
money back. In the meantime, the hacker will have withdrawn the cash and
be long gone.

Of course, I fail to see how it's the case that hackers couldn't also
target the online accounts of small businesses, particularly those that
have high cash-flow volumes.
 
P

Paul Thomas, CPA

Shyster1040 said:
Of course, I fail to see how it's the case that hackers couldn't also
target the online accounts of small businesses, particularly those that
have high cash-flow volumes.



A while back there was a story on one of the various news servers about
small to medium charities being the target of scammers. The trick was to
contact a mid-sized charity (you can get the data from Guidestar) with a
small staff and a large bank balance, contact them to make a donation - by
check - write a $100 or $200 check and send it in, wait for it to clear the
scammers bank, order a copy of front and back of the check from the bank -
tada!! - they have the routing and account information. They then contact
an on-line bill paying entity to pay "their bills" via the internet, who
obliges, they verify the banking information you submit - and donchaknow -
the corporate resolution has your name on it too. And the scammers direct
the on-line company to begin paying out to themselves almost all the money
in the account.

Oh, a month, two, three or more later, the volunteer treasurer is trying to
figure out why they are bouncing checks all over the place.........
 
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B

Big John

A while back there was a story on one of the various news servers about
small to medium charities being the target of scammers. The trick was to
contact a mid-sized charity (you can get the data from Guidestar) with a
small staff and a large bank balance, contact them to make a donation - by
check - write a $100 or $200 check and send it in, wait for it to clear the
scammers bank, order a copy of front and back of the check from the bank -
tada!! - they have the routing and account information. They then contact
an on-line bill paying entity to pay "their bills" via the internet, who
obliges, they verify the banking information you submit - and donchaknow -
the corporate resolution has your name on it too. And the scammers direct
the on-line company to begin paying out to themselves almost all the money
in the account.

Oh, a month, two, three or more later, the volunteer treasurer is trying to
figure out why they are bouncing checks all over the place.........
All too deep for country boy trying to get by in the big city!!I'm sure
it is all in my best interest!!

I just got back from the branch bank, where I showed my drivers
license, gave my SSN and they pulled up my account and transferred many
pesos from my personal account to the commercial account number I
provided. It was a closed deal within 2 minutes!! When I finished I
asked why I couldn't do thas on line, since they have all sorts of
security passwords and "images" to identify me, and they have no idea.
It's the rule!!

FWIW I just got a notice from another bank,(Broadway National, in San
Antonio) that starting in a few days they will be instituting a new
security system using secret images and phrases (which is already in use
by BoA)that will make their "on-line banking more secure than paper
based banking". Hmmm.It will be interesting to see if I can transfer
from individual accounts to commercial accounts there when that's done!!

bj
 

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