Expert: Ed McFarland - 5/11/2006

Question
I have a small photography business which is an s-corp (4 people including myself) in California. We wanted to open a new bank account for the s corp and we're attracted to the apy (3-4%) of some of the internet banks out there now. However the offers are for personal bank accounts. Is there anything illegal about using one of these personal checking accounts as our main bank account? Since we simply invoice all our clients for our service we don't need any merchant account/sales features. Nor do we write an exorbitant amount of checks every month, and we do payroll with an outside service. Anything wrong with such a set-up?

thank you for your time and help,

-Edward Porter

Answer
There's nothing illegal, unless they ask you if this for business and you lie about it. Then it is fraud.

What will probably get you tossed is the volume. My bet is that you are allowed 6 transactions a month. You'll exceed that and the bank will put you into a low or interest deal.

If you are looking at it for a place to stash reserves, you should not have much of a problem.

Good luck