Bank Account and Dropshipping Credit Card

[daniel21]

Hello, I am currently working on starting my first ever dropshipping ecommerce site. I new to all of this and am feeling sort of overwhelemed on exactly what to do. From what I have read and researched from dropshipping is that i need to have 2 seperate bank accounts, one personal and one for business, and a credit card for dropshipping purposes. I already have a personal checkings account but I do not have another account for my business or a credit card. I'm worried about this stuff now because I contacted a wholesaler that carries products I want to offer in my store and they emailed my and application that ask for bank account information so I am assuming this is a normal procedure for most wholesalers.

1. I was wondering how I should proceed with the bank account for my business. Should just head to my bank and ask to open up another checkings account or to setup an actual business account. For some reason I think it is less cost expensive to just get a checking account vs business account. Also I am wait to setup an LLC because I have no site/sales/idea whether or not the niche I will choose will do well but I have an EIN and a Certificate of Registration in my State.


2. Also how should I proceed with the credit card for dropshipping situation. Should I set it up with my bank with the new account or seperately. Or would it be better to apply for one online with Fidelity or Capital One 360, I have heard from others that they are good cards for dropshipping for the rewards. Also was wondering was it smart to apply to Fidelity and Capital One 360 since the city where I live there is no physical location for either. I am a full time college student as well with no job so I don't know whether really plays into things as far as getting approved.




Would appreciate recommendations and advice.

 

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[TJPB]

You'll need to have a legitimate business entity established to setup a business checking account.

 

[JasonR]

You'll need to have a legitimate business entity established to setup a business checking account.

You can set up a business checking account in your name (what I did) to start. You can change it later.

These questions are very simple questions which can be easily answered by your bank and/or Google research. Don't know if you can get approved? Apply. None of us can tell you.

You shouldn't be wasting time asking these questions, just DO them. You should be focused on your business and your value proposition, not the BS things like LLCs, bank accounts, etc. Those things are all easy to do.

Good luck.

 

[AmyQ]

If you are working with an EIN and have not formed a business entity, you are functioning as a sole proprietor. A sole proprietor is personally responsible for all business debts, so I don't see any advantage to opening a business checking account. I would open a separate bank account to simplify bookkeeping/record keeping.

As far as your credit card question, I would get a credit card at a different bank/institution from where you get your bank account due to cross-collateralization. Credit cards are unsecured debt. However, if you have your bank account and your credit card from the same institution, the bank can seize the funds from your account to pay your credit card bill if you are late on payments. This also applies to mortgages and business loans, so we never keep our savings/checking at institutions we have credit accounts with. We pay our bills, but why add the risk if you don't need to?

 

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[GuestUser152]

I'm in the process of establishing my own dropshipping ecommerce website, but am further along in the process than you. Feel free to PM me and I can give you some tips on things I've seen along the way.

 

[daniel21]

You can set up a business checking account in your name (what I did) to start. You can change it later.

These questions are very simple questions which can be easily answered by your bank and/or Google research. Don't know if you can get approved? Apply. None of us can tell you.

You shouldn't be wasting time asking these questions, just DO them. You should be focused on your business and your value proposition, not the BS things like LLCs, bank accounts, etc. Those things are all easy to do.

Good luck.

Thanks for the advice. Yea I feel like I am over analyzing things due to being a little nervous from start my first store.

 

[daniel21]

If you are working with an EIN and have not formed a business entity, you are functioning as a sole proprietor. A sole proprietor is personally responsible for all business debts, so I don't see any advantage to opening a business checking account. I would open a separate bank account to simplify bookkeeping/record keeping.

As far as your credit card question, I would get a credit card at a different bank/institution from where you get your bank account due to cross-collateralization. Credit cards are unsecured debt. However, if you have your bank account and your credit card from the same institution, the bank can seize the funds from your account to pay your credit card bill if you are late on payments. This also applies to mortgages and business loans, so we never keep our savings/checking at institutions we have credit accounts with. We pay our bills, but why add the risk if you don't need to?

Thanks for the tip AmyQ. I am currently functioning as a sole proprietor so I am going just setup separate account. Good point about the cross-collateralization I didn't even consider that.

 

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