Posted June 22, 2024 by James Billings
Banking with Your Business Trust: Understanding the Landscape
Introduction
We’re going to talk about banking with your business trust today. This is one of the questions that people ask me from time to time. They even look for banking information on our website.
The Dual Nature of Business Trust Banking
Banking with a business trust is both a handicap and an opportunity. Banks, brokerage houses, and bankers all vary significantly. The primary challenge is that not many bankers are knowledgeable about business trusts, which simultaneously creates an opportunity for those who navigate the process correctly, leading to confidential account setups.
The Contrast with Common Business Entities
If you think about a corporation, an LLC, or a living trust, all the bankers know about them. In contrast, business trusts do not come up as often, which sometimes causes them to be miscategorized, perhaps similarly to unincorporated associations.
Proactive Steps for Successful Banking
Being proactive is crucial. Research your bank online, review their forms, choose the right branch, and decide on the banking officer to approach. Consider any existing relationships with the bank that could facilitate smoother interactions. Decide whether a bank or brokerage house suits your needs better as they differ in their operations.
Starting Your Business Trust Account
So, where do you want to get started with all this? You can establish business trust accounts, but it requires effort on your part. Prepare for KYC (“know your customer”) questions and be familiar with your NAICS codes. The smoother you make the process for your banker, the easier it will be to get your account set up and approved.
Legal Approvals and Paperwork Accuracy
Often, your trust paperwork will need legal approval. Ensure all documents are correct and complete. Any omissions can result in your application being rejected.
Understanding Bankers’ Risks
Bankers are cautious about losing their jobs over incorrect approvals. They’re unlikely to risk their employment for your business trust account, emphasizing the need for you to be knowledgeable and prepared.
KYC and Relationship Building
Understanding KYC regulations and establishing a good relationship with your bank are vital. Choose your bank branch wisely, whether it’s a supermarket branch or a dedicated business branch.
Signatories and Trustee Roles
Decide who will be the signatory—whether it’s one person or more. Identify whether they are a trustee, a beneficiary, or someone else involved in the trust.
Conclusion
Banking with a business trust is complex but achievable with proper preparation. If you need guidance, consider our business trustee e-seminar.
Get your free copy of the LLC versus Business Trust comparison chart here.
If you have any questions, please contact James Billings, founder and owner of TrustArte, at james@trustarte.com or 619-537-8625. Visit my YouTube channel for video content.