Is Your Business Bank Account Protected From Internet Fraud?

You would be surprised that it isn't!

As detailed by the LA times article (http://www.latimes.com/business/la-fi-perfin21-2010mar21,0,456329.column) with the new banking laws, only personal checking accounts are protected from internet fraud. Commercial accounts are not given the same protection.

The article's recommendation? Small business owners (the article wasn't clear, but I can only assume they meant those that are self-employed since corporations cannot have personal accounts) have 2 PERSONAL checking accounts.

I found the article to be illuminating. Having practiced for years, (which is remarkable since I am only 30 yro! LOL),I still learn something new every day.

I have long recommended that anyone self-employed should have 2 accounts, however 1 was personal and 1 was business.

This 2 account system is extremely topical given that I have heard the I.R.S is going to be targeting small businesses, with losses for examinations. Doesn’t make much sense considering small business have been getting hammered in this economy, lack of lending a from the banks, and loss of customers to name a few.

Oh wait I just mentioned banks again in my blog. I have had clients this week refer to banks as the “evil Empire”. They take from the us (the government) pay us back, then screw the taxpayers with higher fees, no loans and limited if any loan modifications.

And Loan modification is still a hot topic in our practice with several people still trying to seek them out. I love it when a highly educated and at one time highly compensated, taxpayer tells me that their loan is being reviewed by a clerk in the Midwest probably making $12 per hour. Hell my gardener makes more than that, and he doesn’t control my financial future! Or maybe he does!

But I digress. The article brought up a good point. All of that money in your business account is not protected under the new banking laws governing internet fraud. A hacker could drain the entire thing and the bank is completely off the hook!

So my new advice to clients is to still have 2 accounts, but both PERSONAL (at least according to the bank). One they use for truly personal transactions, the other is for business use.

This way you still are protected from internet fraud and keep your accounts separate so in the case of an audit the Federal Government isn't racking through your personal life!


Have a good week everybody . Remember April 15 is just around the corner and don’t forget an extension of time to file your taxes, is just an extension of time, not an extension of the taxes that may be due. Those are still owed on April 15th!

Good luck and Happy Tax Season.