Most of us aren’t in the travel business because we love numbers and bookkeeping. Yet, as a small business owner, you’re most likely going to have to be doing the bookkeeping (as well as the sales, marketing, and customer service). So let me give you a heads up on how to start your agency with a strong financial infrastructure.
This is one of those “learn from my mistakes” and “I wish someone had told me this when I started” articles. ☺
Setting Up a Business Bank Account
Why is business structure important when it comes to setting up a business bank account? Well, if you’re a Sole Proprietor you can use your personal bank account, so you don’t technically need to have a separate business bank account. That said—and please, take it from me—it’s a hassle to mix your finances. Keeping them separate from the get-go will save you a lot of time in the future! If you listen to one thing in this article, this should be it.
For those of you that chose an LLC or S Corp route for your travel agency business structure, I didn’t forget about you! Except Sole Proprietor, any other business structure is required to set up a business bank account whether you want to or not. (IRS’s rules, not mine.)
Business bank accounts are going to differ from your personal bank account in a few ways:
- You vs. Your Agency: Your clients make checks out to your travel agency, not your personal name. It’s thrilling seeing your first check with your agency name on it!
- Interest (or lack thereof): Don’t count on earning interest with a business account, savings or checking. Boo. ☹
- Cash Deposit Limits: Most biz bank accounts will have a limit on the amount of cash you can deposit each month. After that, plan for a fee. Note: Most agencies aren’t going to reach the monthly limits and if you do, don’t worry, the fees aren’t going to require that you sell your first born. (They vary quite a bit, but $5,000+/month for a cash deposit limit is a safe bet).
- Monthly Transaction Limits: You’d think banks would want you to be making loads-o-business deposits since that means they’d be sitting on heaps of your cash (seeing how they’re not paying out interest and all) … but no. Since business accounts usually involve more transactions than a personal account, they’re deemed to be more work. As such, the banks will need some compensation.
Business and personal bank accounts do have some similarities—you can also count on minimums to open your account and monthly fees! That is . . . unless you look at a CREDIT UNION (enter cue music)!!
Credit Unions, A Steph Favorite
Here’s my little plug. A community credit union is a great option and typically less expensive than the Big Banks. Credit union business accounts typically have fewer fees and they usually do away with the cash deposit limits—deposit away! You can search for a local credit union here.
Still not sold? Alright, I see I need to pull at your lil’ heart strings and not just your financial sensibilities.
Here’s my story: I personally switched over all my bank accounts from Wells Fargo to my local credit union once I started Host Agency Reviews. Yes, it was a bit of a hassle, but as a small business owner, I liked the idea of supporting a local, non-profit small business that was owned by its members. Bonus: My credit union business account was free to open and had fewer (and lower) fees than Wells Fargo’s business account option!
And if that doesn’t sway you, maybe the quote on my local bus stop bench will, Big Banks, No Thanks! (Or, the memory of the 2008 Financial Meltdown might do the trick?). End of plug.
Things to Consider When Choosing a Bank
When you’re choosing your banking partner, here’s a few things you may want to consider:
- Location: The closer, the better. When it’s 4:30pm and you have a check you need cashed before the end of the day, the miles are gonna matter.
- Branches: Does your bank have other branches? Of course, one of the advantages of the Big Banks is that they have a zillion branches, which is admittedly quite handy.
- Monthly service fees
- Cash handling fees
- Excess Transaction fees
- Overdraft/stop check/cashier’s check/wire transfer fees
- Minimum to Open
- Average Monthly Balance: Do you need to maintain a certain average balance?
It’s up to you what you prioritize! Every bank’s website will have their business account fees listed. Just make sure you’re reading the fine print!
Business Documents Needed by Banks
Imagine if I went into my bank and told them I had started up a new agency and would like to open a business checking account. They’re going to want some proof showing my agency is a legal business and that I’m the owner of said agency.
For those of you doing the 7-day Setup, you’ve already taken care of registering your name with your state and getting your Federal Employment Identification Number (FEIN) in yesterday’s action items. (If that last sentence was gibberish to you, make sure to sign up for our free 7-Day Setup challenge!)
It’s always good to give the bank a call before going in to set up your new business account to ensure you’re bringing everything you need. But, I know you’re chomping at the bit so mentally prepare to bring this stuff in:
- SS# or FEIN (and I really, really recommend getting an FEIN)
- Business License showing both business and owner’s name, or
- Business name filing document, such as a Fictitious Name Certificate or Certificate of Trade Name, showing both business and owner’s name
- Your First Born (HA! Gotcha! Just making sure you were paying attention.)
- Partnership Agreement showing business name and name of partners, and
- Business name filing document, such as Fictitious Name Certificate or Certificate of Trade Name, showing business name and name of partners
- Articles of Organization or Certificate of Formation
- Corporate Resolution identifying authorized signers if officer names are not listed on Articles of Organization or Certificate of Formation
Opening a Business Credit Card
Your business is going to have expenses and a business credit card will be pretty hard to live without. You’ve already got a credit card, you say? Just like a business bank account, a separate business credit card isn’t required for a Sole Proprietor (although I do recommend it), but it is required for those of you going the LLC or any other route.
Opening your credit card right away—even if you don’t need it yet—ensures that your card will be ready when the rubber hits the road. Which is soon, by the way! Eeeeekkkk!
As for which one is best . . . well, I can’t really answer that as some people love the airline points, some love cash back rewards. I love the ones that allow me to put a picture of my dog Rigel on the front of it. ☺
But I won’t leave you completely hanging, here’s a cheat sheet of what you can expect to be asked on your application for a biz credit card:
- FEIN (that darn thing keeps popping up, doesn’t it?!?!)
- Business Name
- Business Structure
- Type of Business
- Years in Business
- Annual Sales
Choosing Bookkeeping Software (last but not least!)
Goodness me oh my … are we done yet?! *sigh* No.
Now we’ve got to keep track of all the money coming in and out of that darn bank account we set up and the credit card we applied for! Doh, what were we thinking setting those up? 🙂
I’m going to launch in to bookkeeping software options, I promise, but I think it’d be smart to first explain what it is and why it’s so important. Bookkeeping helps keep track of your day-to-day expenses/income so that when tax time comes, everything is all organized in its proper category! The government is going to want to know how much commission you brought in from your travel sales so you need to keep track of that, among tons of other things. Quickbooks has a great article explaining accountant vs. bookkeeper if you’ve got 3 minutes.
Here’s the truth, most new travel agents I spoke with started with Excel as their bookkeeping software and do it themselves. It’s not pretty but it gets the job done . . . and for free! You can check out the original thread here (and please, feel free to share your experiences in the comments!)
How do you keep track of your accounting? I use Quickbooks but am curious how other people crunch their numbers. So…
Now, if you have extra cash burning a hole in your pocket, you can always purchase some bookkeeping software to make life a little easier (and prettier). Some of these are affiliate links, which means I make a little bit of moola when you buy something. Your purchase not only helps your business, but helps support Rigel’s marrow bone obsession. 🙂
Without further ado, here are the main players most travel agents use for bookkeeping software:
- Excel: Tried and true. And tedious.
- QuickBooks: Available in either the desktop (QuickBooks Pro) or online version. This is the one I use and recommend.
- Price: 30-day free trial. Their pricing changes with sales, but plan for $199 for desktop version, $10/mo for QB online.
- Shoeboxed: Send your receipts in one big envelope and magic bookkeeping elf organizes it all! Integrates with Quickbooks.
- Price: 30-day free trial. Starts at $9.95/mo
- Quicken: Also by Intuit, the makers of Quickbooks. Travel agents that use Quicken for their personal bookkeeping (which is what it’s intended for) often end up using it for business.
- Note: If your company structure is an LLC, go with Quickbooks. Having your personal and business financials mixed is a no-no for corporations.
Once you’ve chosen your bookkeeping software, you’ll need to decide if you want to teach yourself the software, or you can look into hiring a professional bookkeeper (which I eventually ended up doing once my biz got off the ground because I am so terribly bad with accounting!).
Not sure where to start? Just so happens I have a few suggestions to help you find a bookkeeper for your travel agency:
- Local Bookkeeper: Word of mouth can’t be beat! Plus you’ll be giving this person access to your bank accounts and other sensitive information, it’s nice to meet them in person. Try putting up a post on Facebook, asking other entrepreneurs, or asking your tax person for a referral.
- Price: ~ $30-50/hr
- Bench: I like to keep it local but sometimes, working with someone online is just plain easier. Bench gets great reviews but at around $125/mo, it’s probably spendier than a local bookkeeper.
- Price: Starts at $125/month for annual pre-paid plans
Breaking it Down: A Recap
That was A LOT of info. Cheers for getting to the end! Your brain is probably brimming over with info so I want to recap things one more time. Here’s your key takeaways:
- Open a business bank account (*cough* with a credit union)
- Open a business credit card
- Decide how you want to do your bookkeeping (yourself or hire it out)
- Give this article a FB like/tweet/share or comment!
I know what you’re thinking, “Man, she’s long-winded. She babbled on for ages and then summed it up in four tiny bullet points.” As a reward, you’ll get a bonus worksheet to help you choose a bank if you sign up for our 7-day Setup Challenge ☺ Thanks for sticking with me!
Hi, I’m Steph! I specialize in working with people looking to start and/or grow their travel agencies. And apparently travel agency business structures? 😉
I’ve worked with thousands of agents and helped them learn more about the travel industry… and I’m happy to help you out too. If you’ve found this article helpful, please help give it some love via like/tweet/share or drop us a comment! Learn More About Steph>>