In opening a business account, like most things in life, the convenient option is not always the best option.  Particularly if you are considering a joint account with one or more partners, it is important to understand the risks and be aware of different options.

What is a joint bank account?

A joint bank account allows each partner on the account to make deposits, withdrawals, and other transactions.

What are the benefits?

This is a convenient option that allows partners to manage finances through a centralized account.  Anyone on the account has equal ownership rights and does not have to wait for consent to complete a transaction.  Joint access also allows for transparency and oversight.  Each partner on the account is insured up to $250,000 which means more total coverage.

What are the pitfalls? 

With convenience comes risk of abuse.  Partners on the account can each make deposits, withdrawals, and transfer funds.  If a partner withdraws all funds or engages in other unauthorized transactions, the only recourse is legal action.  If a partner is having financial issues or involved in a divorce or lawsuit, creditors may be able to pursue funds in the account regardless where they originated.  More account owners also means more chances for a security breach.

What are other options?

An option that offers convenience with more protection is a joint account that links partner accounts.  Also, a tenants-in-common joint account adds more protection by requiring multiple signors on transactions.  These are just a few to consider.

Please contact us if you would like help in determining what type of account may work best for your business needs.

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