Hi Shoppers
This is the first time I did taxes for my business. My accounantt highly suggested I go from a SS# to a Fien# and open a business checking account. This way I can set up as a corporation. The problem I find is opening a business checking account. These accounts have high minimum balances or monthly fees that would really hurt my bottom line. I average between $600 to $700 per month in shops. Any advise on what to do? Can anyone recommend a bank for a business account? Should I even go this route?

I know several banks [having done enough bank shops] that have free business checking. Your results may vary, depending on your location. Stay away from the big banks and look towards state or local banks. Also a credit union might be a good idea.

There is absolutely no reason to set up a business account. If you want a second checking account, open a second no-fee personal account and deposit your MS fees there. Also, NO reason to use an EIN or to incorporate. Your accountant is over-thinking annd complexifying this very small business. If you incorporate you open a whole new can of worms!

I agree completely with walesmaven. As a tax consultant for 12 years I can tell you he is completely right and your accountant is really stretching it. Keep it simple!

Edited 1 time(s). Last edit at 05/11/2013 08:58PM by jpgilham.

If you do want to keep business and personal at different banks there is a pretty regular bank shop that allows a free account.

Yes, I can offer some advice which is based on my opinions. I am not an accountant, and the following is based on my personal viewpoint on these issues.

You have a small business which will never be a big business. Incorporating will not benefit your business but will benefit your accountant because he will charge you more for his services.

It is not necessary to have a separate account for your business if you keep accurate records of all business income. If you want a separate account, set up another free personal account under your own name and use it for a business account.

You can get an EIN number and use it if you prefer but it is not necessary. Some people prefer to use the EIN because they feel it is safer than putting your SS number out there in a lot of different places. I have an EIN for those few companies who prefer it, but I have used by SS number in the mystery shopping business for several years without a problem. Some posters on the forum have provided information indicating that getting an EIN number in some areas may generate additional taxes and reports on state, county, and local level. You might want to investigate this thoroughly before jumping in with an EIN number.

My most important recommendation is discuss your situation with some more accountants. Your accountant is trying to set you up as a corporation because that benefits him, not you. I would suggest an accountant who specializes in very small businesses set up as proprietorships, which is what you are until you incorporate. Incorporation for a mystery shopper will be unnecessary and costly.

To protect yourself on the liability side, be sure your automotive liability insurance covers your mystery shopping driving.

I agree with what Mary has said. I would just add one thing...give some serious consideration to a $1 million personal liability policy. I look at that as a better investment than incorporating.

I also understand your accountant's view on a separate checking account. Setting up a separate account does help establish that you are trying to do this as a business. There are enough shops for banks that you can get paid to research your options.

James' suggestion on the $1 million liability policy is spot on. I actually have one of those, and also have an add on rider on my car liability for my mystery shopping driving. The $1 million policy I have is less than $100 a year, and covers any kind of liability - home, car, personal, whatever. I bought this from the same company that carries my homeowners and car insurance and I think it all goes together as a package. I'm not sure, but I don't think you can buy the $1 million policy at that price if you don't already have the homeowners and car with the same company. Maybe, maybe not.

There is no need to "set up" a sole propietorship. Sole propietor is what you are unless you form a corporation or LLC. It is automatic. Just report you business earnings ans expenses on IRS Schedule C and all will be well.

If someone offers to set up a sloe prop for you, they are asking you to pay them to do nothing.

Correct, Wales. All businesses are sole proprietorships until they decide to become something different. Sorry I wasn't clear on that.

Mary, I had no doubt that you knew that, but posted in case others might not.

It is not necessary to have a separate account for your business if you keep accurate records of all business income. If you want a separate account, set up another free personal account under your own name and use it for a business account.




I agree with the above and offer another method.

I use the classes within Quicken and reports to separate my business and personal transactions that occur in each of my two checking accounts (debit cards purchases and deposits) and on my two credit cards (purchases).

Admittedly this method is not for everyone. However, the point is you do not need a separate account at all if you keep accurate records within your accounts. If you choose to use separate accounts use personal accounts and personal credit cards. These accounts offer everything shoppers need without the additional fees banks charge for business accounts.

Additionally, remember this business is a secret business. Think about how would it look if purchased an adult novelty for a mystery shop with an AMEX business card???? That would stick out don't you think? Would the employee be thinking how are you going to use it -- I mean write it off?

Wow my accountant told me I didn't make enough to really even worry about anything. I made maybe 3000 in a year. Is he wrong?

Soul, tell us more. Do you have other income in addition to the $3,000 mystery shopping?

Soul,
Mary is right. The answer will depend a lot on your other sources/levels of income.

If you only made 3000 for the year...you don't need an accountant. If you made $3000 mystery shopping on top of something else...you may be getting bad advice.

Not to change the topic, but why would you need a $1million insurance policy? In what instance would this be needed?

WillShop, your insurance agent can explain that but I'll take a shot at it based on memory. Let's look at a scenario in which you are at fault in an accident where two people are killed. Let's say you have liability insurance on your car in the amount of $100,000. You can be sued for any amount, not just the amount of your $100,000 policy, and you can be sued by each person involved in the accident or by their survivors.

The judgment in the case on your accident could be much, much more than $100,000. Your $1 million liability policy would kick in and protect you up to $1 million, and provide you with additional legal representation in the law suit. Not only are you protected up to $1 million, you know that amount is readily available to victims of the accident.

Here's the way I looked at buying the policy. I am comfortable financially if I don't meet a major setback, but my most productive earning years are behind me. If I get hit with a big judgment (major setback), it would wipe me out and I would never recover. The policy I have at around $100 a year is a smart buy for me.

I am interest in doing mystery shopping what do I need to do to get started. What companies legal afraid of falling for fraudelent company . Help

Hi, earnest5, welcome to the forum. Everything you need to know is here, free, on the forum, for you to read. Being a mystery shopper means running your own small business.

To start your business, you need to invest some time to research how to do it and to sign up with several mystery shopping companies. Below, at the blue link at the bottom of the page, Official List of Mystery Shopping Companies, is a list of 200 legitimate mystery shopping companies. After you read on the forum to research and determine how you will run your business.

Start signing up with companies. You will go to their website and register, providing your personal information and SS#, and you will sign an Independent Contractor Agreement (ICA) and sign a confidentiality agreement. Some will ask for writing samples. Others may require that you take tests. After being accepted as a shopper, you will be able to check the job boards of the companies to see if they have any jobs in your area.

You determine how much money you make by how many assignments you want to accept and by which assignments you accept.

Good luck!