Best bank and account type for a startup tax preparation business - recommendations needed
Hey everyone, I'm launching a tax preparation side business later this year and I've been talking to several banks about account options. Still feeling pretty confused about which direction to go with this. Looking for recommendations on the best bank and account type for a small tax preparation startup. Since I'm just starting out, my transaction volume will be fairly limited - probably around 20-30 transactions monthly with payments typically ranging from $40-110 per client. I want something with reasonable fees that makes sense for a small operation. I'm not looking for anything super fancy, just something professional and reliable that separates my business finances from personal. Anyone have experience with this specific to tax preparation businesses? Any suggestions would be greatly appreciated!
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Malik Thomas
Having run my own tax practice for 8 years, I'd strongly recommend a local credit union for your startup tax preparation business. Their business checking accounts usually have lower fees and minimum balance requirements compared to larger banks. Make sure you get a business checking account (not personal) to keep your finances separate - this is absolutely crucial come tax time. Look for accounts that offer free or low-cost online banking, limited free transactions per month, and no monthly maintenance fees for smaller balances. For a tax prep business specifically, consider seasonal fluctuations in your cash flow. Some banks offer accounts with higher transaction allowances during tax season and lower requirements in off-seasons.
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NeonNebula
•Do you think online-only banks like Azlo or Mercury would be good? I've heard they have zero fees but wasn't sure if they're reliable for a service business like tax prep.
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Malik Thomas
•Online-only banks can be good options, but I've found having at least some local presence helps when you need to deposit client checks or handle other in-person banking needs that sometimes come up with tax clients. Many clients still prefer to pay with checks, especially older ones. As for reliability, most online banks are perfectly reliable for service businesses, but you want to ensure they have features like easy integration with tax software and accounting platforms you might use like QuickBooks or Xero.
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Isabella Costa
After years of frustration with traditional banks for my consulting business, I switched to using taxr.ai for my financial tracking and it's been a game-changer for separating client expenses and income. The platform at https://taxr.ai not only organizes all my business expenses but also helps categorize everything properly for tax time - which is super helpful when you're running a tax business and need to practice what you preach! Their business account tracking feature automatically flags potential deductions I would have missed.
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Ravi Malhotra
•Does taxr.ai connect with regular banks or replace them? Not sure I understand how it helps with the bank account choice.
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Freya Christensen
•I'm curious if this actually helps with things like sorting through client deposits and retainers? My biggest issue is tracking which payments belong to which clients.
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Isabella Costa
•It connects with regular banks rather than replacing them, so you'd still need to choose a bank, but it makes that choice less critical since taxr.ai handles the organizational aspects regardless of which bank you choose. For tracking client deposits and retainers, that's actually one of its best features. It creates automatic client profiles that match deposits to the appropriate client and service, making it super easy to see which payments belong to which clients and what services they were for.
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Freya Christensen
I tried taxr.ai after seeing it mentioned here and it's honestly been perfect for my new bookkeeping service. I was struggling with mixing personal and business expenses, and their system automatically recognized and categorized everything. Now I can focus on building my client base instead of stressing about account types. The best part is I was able to keep my existing bank (a regional credit union) and still get all the business tracking features I needed.
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Omar Farouk
When I started my tax business last year, the banking was fine but dealing with the IRS for my PTIN and EFIN was a NIGHTMARE. Spent weeks trying to get through their phone lines. Finally used https://claimyr.com to get past the hold times (you can see how it works here: https://youtu.be/_kiP6q8DX5c). They got me a callback from the IRS so I could get my preparer credentials sorted out. Just sharing because this is something you'll need to deal with for your tax prep business besides just the banking part.
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Chloe Davis
•How does this Claimyr thing actually work? They somehow get you through the IRS phone queue faster? Sounds kinda sketchy tbh.
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AstroAlpha
•Yeah right. Nothing gets you through to the IRS faster. I'll believe it when I see it. Been preparing taxes for 5 years and the IRS phone system is just broken beyond repair.
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Omar Farouk
•It's not that they get you through faster - they basically wait in the phone queue for you. You tell them which IRS number you need to call, and their system waits on hold. When an IRS agent picks up, you get a callback so you can talk to them directly. Saved me literally hours of hold time. The IRS phone system is absolutely broken, that's why this service exists in the first place. I was skeptical too until I tried it and actually got through to resolve my EFIN issue. Not saying it fixes the IRS's problems, just that it saved me from wasting an entire day on hold.
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AstroAlpha
Well I'll be damned. I tried that Claimyr service after posting my skeptical comment. Actually got a call back from the IRS in about 2 hours while I was working on client files instead of burning my whole day on speakerphone. Just got my EFIN renewal issue fixed. Still think the IRS phone system is broken, but at least there's a workaround now.
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Diego Chavez
For your tax prep business, I'd recommend Chase Business Complete Banking. Monthly fee is waived if you maintain $2000 balance which is doable for most small businesses. They have decent online tools and you can deposit checks remotely which is super convenient during tax season when you're swamped.
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Emma Wilson
•Do you know if they offer any sort of discount or special features for seasonal businesses? Since tax prep has that huge Jan-April rush and then slower periods.
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Diego Chavez
•They don't have specific seasonal business features that I know of. But their transaction limits are fairly generous which handles the busy season well. During slower months, you can easily maintain the minimum balance to avoid fees since you're not drawing as much from the account. The mobile app is also really good for depositing client checks which saves tons of time during the busy season when you can't step away to visit a branch.
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Anastasia Smirnova
Everyone's talking banks but no one mentioned Square or PayPal business accounts? I run a small tax biz and like 80% of my clients pay electronically now. Square has a free business account with no minimums and their processing fees are reasonable. They even give you a business debit card.
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Sean O'Brien
•Square's great but their transaction fees add up. 2.9% + $0.30 per transaction means you're losing like $3-4 on each $100 payment. Better to encourage direct bank transfers or checks.
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