Whatever happened to free business checking? Well it will soon be a thing of the past. Recently, in a scathing editorial in the Wall Street Journal a business man complained that Free Business Checking is now dead on arrival thanks to the Frank-Dodd Banking Reform Bill, which was later signed into law by President Obama - indeed, that was one man's opinion, but is he correct?
Well, from a banker's perspective they must raise their prices to comply with the new consumer laws, and they don't often make a lot of money on their small business customers, as they did previously, when banks provided a greater array of services and enjoyed enormous economies of scale due to the numbers of small business clientele. With the increased regulations, this also means more oversight, more costs, and more bank employees to comply. Guess who has to pay?
Okay so, this brings me to my next point. If you are running the accounting for your own small business or if you work in a small accounting firm with small businesses as clientele, you must not forget that you need to deduct those new bank charges for the monthly fees of the business checking account. And you must understand that if you don't account for that, the business checking account balance will be off by that amount.
Indeed, the consolation in all this is that whereas, you have more costs now, at least you can deduct the expense you will be charged by your bank now, for something that was free before. If this upsets you in anyway, whatsoever, you can call your congressman, and see if they care. It's not my job to take sides, just explain the accounting issues involved here. Please consider all this and stay in the black will you?
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