Small Business Banking

Access to a full range of small business banking services is the foundation upon which new corporations are built. When individuals decide to go into business, one of the first stops on their way to entrepreneurial success should be a visit to the local banker. Aside from having a wealthy uncle with deep pockets, most new owners need a friend in the banking business that can help steer a fledgling enterprise into the profit margin. Establishing a relationship with local banking institutions is like a sailor trying to get his sea legs on a maiden voyage: if the sailor is going to stay aboard the ship, he needs to learn how to keep both feet firmly planted on deck. Likewise, novice entrepreneurs need the stability of small business banking and the long term relationships that can be cultivated to provide a measure of stability and financial security so necessary in today's volatile market.

A popular Bible quote states, "A man that hath friends must shew himself friendly: and there is a friend that sticketh closer than a brother" (Proverbs 18:24). And when it comes to cultivating friendships which lead to profitability and close associations with local companies, neighborhood bankers are keenly adept. Financial institutions know that in order to stay viable, they must depend on building relationships with small and large corporations; but small entrepreneurs are their bread and butter. A fledgling entrepreneur is likely a sole proprietor or owner in a partnership consisting of two to three individuals. Banks cater to companies that invest in the community and depend on local financing for new ventures, equipment, vehicles, facilities and payroll. Because the needs of sole proprietorships and Mom-and-Pop operations are so diverse, banks can build enduring relationships by providing a myriad of specialized services, from setting up lines of credit and asset management accounts to establishing checking and money market accounts and providing vehicle financing. And a good local lender can be the backbone of a startup company, providing counseling to help owners avoid the financial pitfalls that so many new entrepreneurs fall into. Formulating several small business banking relationships with local companies provides years of opportunities for banks to offer financial and consultant services not only to employers, but also to employees who may eventually become long standing customers.

Individuals who are new to corporate financing or owners who want to expand operations need the counsel and advice of bank loan officers and financial planners in securing operating capital, setting up accounts to handle future expansion, or developing retirement plans. Entrepreneurs just starting out will not only need small business banking services, such as a corporate checking account to transact day-to-day business, but also a separate account to handle payroll and long-term investment instruments, such as certificates of deposit, to put aside capital as a hedge against inflation or recession. Startups may require loans to purchase equipment, vehicles, and office machines, or to build or remodel a physical facility from which to operate. As the company grows, a local bank may help establish employer-provided retirement savings funds, such as Individual Retirement Accounts or 401(k)s for employees. And lines of credit enable new owners to purchase much needed equipment, tools, vehicles, or facilities without breaking the bank. Competitive interest rates and low payment plans can keep the company afloat while it is still in its infancy. Some banks offer low-rate loans with low payments for the first two to three years to allow businesses a chance to get established and higher payments as the enterprise realizes more profitability.

Sole proprietorships and partnerships can take advantage of small business banking services that give them the ability to operate like larger corporations without hefty fees. Most banks and financial institutions offer services and special accounts for lone entrepreneurs, Mom-and-Pop operations, and limited liability corporations that don't have a lot of capital, but still must compete with companies twice their size. Having access to small business banking options, such as corporate credit cards, lines of credit, web-based accounts, and check cards simplifies operating a new enterprise. All of these options help smaller corporations become financially stable and build consumer confidence that is so important in keeping a business viable. When customers feel confident about a company's fiscal stability, they tend to become loyal patrons and spread the word about the company's reputation, efficiency and ability to provide high quality products and service.

To apply for small business banking services, new entrepreneurs should visit the local bank and talk with a loan officer or president. To open a new corporate checking account, owners must have an Employer Identification Number, or EIN; articles of incorporation certified by the Secretary of State; and a current business license. Most banks require an initial deposit of at least $100 to open a checking account or regular passbook savings. Internet banking may also be an option for new accountholders; and officials will be able to set up electronic accounts. Owners can expect to pay a fee for ordering new checks and a corporate credit card account. Financial institutions which offer startup loans, operating capital, or lines of credit will want to see a business plan which clearly outlines company objectives and infrastructure and projects gross income and expenses over the next three to four years. Business owners who have operated a company for several years should have tax returns which demonstrate an ability to turn a profit. Banking officers will also want to review proposals for repaying loans based on projected earnings. When it comes to small business banking, proper planning is essential; but a local banker can easily become a new owner's best friend; and building a solid relationship is paramount to success.

Off Shore Bank Account

The idea of an off shore bank account always brings to mind those who are attempting to break the law by hiding their money form the tax man. And while there is no doubt about this motive, a bank not on US soil can be used for legitimate purposes. The big deal about banking privileges away from the US begins with the defense that they provide the security and privacy that may not be available from a US banking institute. From this point of view there may be some legitimacy of argument. There are many off shore bank account providers in places around the world where stability of the government is rock solid, so if a person fears for a government upheaval in their own native country, a location that has been peaceful for hundreds of years might be a very strategic place to stash some cash. Of course, if that country does not report their banking transaction to other countries, so much the better. Then a good financial plan turns devious and therein lays the problem.

An off shore account is the thing of which legends are made and the tax cheater needs to make himself invulnerable to the long arm of the IRS. Movies from every decade since the nine forties have featured this idea, and is always associated with a person of ill repute or infamy. While the little guy sweats out his eight thousand dollar tax bill each year and wonders how he is going to make it, our jet setter is wondering whether his purchase of a Barbados estate will be protected from the IRS by his off shore account which subsidized the purchase. No matter how one slices, dices, configures or describes the thing, an off shore bank account is opened typically for one reason: the avoidance of paying taxes that are legally supposed to be paid. The argument from the big boys with the Sherman Tank sized wallets will argue that their tax bracket already pays 80% of all income tax now, and that is undeniable. But 98% of drivers speed at one time or another and feel that many of the speed limits are too constrictive and unfair but we still get tickets. Quite amazing how, when all of us feel emotionally that we are correct on some issue that the superiority of that argument transfers to an entitlement mentality that excuses the breaking of law in order to live the entitlement.

After 9/11, it became to law enforcement officials that anyone seeking to harm to the US could hide money in an off shore bank account in order to privately fund a clandestine act of aggression against the country. Stricter laws began being crafted to require banks from all over the world to begin reporting any off shore bank account with over one thousand US dollars in its possession. But there you go the loophole of all loopholes. Let's take one of the small Caribbean Islands that have been quite popular for the deposit of funds put there for "security" purposes. Will the decades old banking services that have provided privacy for its depositors and profited very handsomely for their services suddenly bow to the demands of a foreign country and spill the beans? As far as Jesus is concerned, there may be secrets now, but He warned: "For there is nothing covered that shall not be revealed; neither hid that shall not be known...therefore whatsoever ye have spoken in darkness shall be heard in the night; and that which ye have spoken in the ear in closets shall be proclaimed upon the housetops." (Luke 12:2, 3)

Despite the fact that perhaps a person wants to use an off shore bank account strictly for the security issue, and this person being from another country whose government is not stable, there is the possibility that this depositor after making a hefty consignment to a savings account finds that the local friendly dictator keels over and suddenly the guy in charge ought to be on Prozac. In most cases, off shore bank account providers are not insured the way US banks are and therein lays a big problem. If the next guy in charge of this tiny country is bi-polar, the money might be gone tomorrow. And let's also keep in mind that a bank such as the one committed to keeping all money transactions private may not be sitting on a sterling reputation and could be involved in some questionable practices itself. The bottom line is: "Ya takes your chances with these guys."

It is certainly legal to have an offshore account as a US citizen and what a person does with his legally possessed money is his business. When some of that money belongs by fiat to the US Treasury through enacted tax codes, it is illegal to not report it, but surprise!, that's not going to happen in many cases. If the government does discover off shore bank account irregularities, they can certainly prosecute someone to the full extent of the law, but the money itself is still safe from Treasury hands and so when a person does get out of jail at age ninety-three, he can go out on the white sand beaches of that little island and soak up the sun. If that's a fair tradeoff, so be it but most of us will pay our required tariffs here and now, whether we like them or not, and take our vacation on that white sand beach before we are mistaken for a prune with sunglasses.

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