Purpose/Style of DBA Accounts

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Question:

I have been in banking for awhile and am being told I am making a mountain out of a mole hill. When it comes to DBA accounts, I have one opinion on what purpose/style account should be opened and I am being told by others that I am not correct. There are two differing opinions when we open a DBA account. For example, one opinion is that Mickey Mouse DBA Great Escape Mousetraps should be opened as a personal style account, where at the account maintenance level, the code would indicate consumer for the purpose of household or personal use. The other opinion is one in which it should opened as a business style account, where at the account maintenance level, the code would indicate business for the purpose of business. The reporting tax ID number in both situations would be the customer’s Social Security Number. If I understand correctly, there are different regulations regarding the purpose/style of an account and there are different protections and benefits for each purpose/style. Can you please help as to which purpose/style would be proper? My best interest is doing things the correct way for the both the bank and the customer.

Answer:

Accounts opened for the purpose of conducting transactions for a business ought to be established as business accounts. There is simply no cogent argument I can think of for knowingly categorizing a sole proprietorship's account as a personal account.

Your bank's CIP and due diligence procedures are different for personal and business accounts and it's likely that your transaction monitoring procedures differ, too.
Business accounts are not subject to Truth in Savings (Regulation DD) or Electronic Fund Transfer Act (Regulation E) coverage; personal accounts are.
Your bank's service charge and account analysis policies are compromised when a business's banking is done through a personal account.
Basing your account categorization in the type of taxpayer identification number used is a red herring. Social Security numbers can be used as the correct TIN for Limited Liability Companies under the right circumstances, yet no one is arguing that an LLC's account should be carried in the personal accounts portfolio.

First published on BankersOnline.com 8/30/10