Establishing your travel business name and bank account is critical to starting your new travel business and should be some of the first things that you do to get under way. Paying your start up expenses with business checks is a wonderful way to make sure that you have identified all of your business expenses and have made them separate from your personal expenses. Here is how to go about it.
Filing a “Fictitious Business Name Statement” or DBA
Once you have chosen your business name it is time to make sure that it is available for your use and to also open your travel business bank account. While each state is a little different, you will need to visit the state authority responsible for registering business names. Most states require you to file a “Fictitious Business Name Statement” with the local County Recorder’s Office.
You will visit the County Recorder’s Office and check the “Name Availability” files to make sure that no one else is using the name that you have selected for registration. Then you should complete and record your “Fictitious Business Names Statement” with the county clerk. Each county has different fees for the recordation and may have publication requirements, as well.
Once you have recorded your name the clerk will give you the necessary receipts to prove that you have rights to the DBA of the name that is necessary to open a bank account with your new name.
Obtaining a Travel Business Corporate Name
If you are going to start a corporation, you should seek the advice of a business attorney to help you perfect your corporate name. While you can research corporate name availability, you are best off using a professional to help you not only create your corporation, but to properly register the corporate name to make sure you have all rights of usage.
Opening a Travel Business Bank Account
Now that you have perfected your business name it is time to open your business checking account. While some states do not require you to have two separate bank accounts, you should always operate with both an “Operations Account” and a “Trust Account”.
When you sell a tour or a cruise and your client pays you via check or cash, that money is not your money. You are holding that money until you make final payment on the client’s behalf. The most ethical way to hold that money is in a separate trust account. You do not need to create a trust document to establish a trust account. You simply need to identify that the account is a self-imposed trust account to your bank. If the bank balks at this, find another bank. The account could be named “Client Security Trust Account” or some other name that would indicate that your client’s funds are being held in trust. This is most important for home based travel businesses.
Your operating account is where you pay your bills from and where your earned income goes into. Once a client’s tour or cruise is paid in full, the remaining balance is your commission and may be moved into your operating account. Many credit card transactions will be processed by suppliers and the commission sent after travel is completed. This is also considered earned revenue and would be deposited into your operating account. At no time are funds you are holding on behalf of your client (deposits and final payments) ever be deposited into your operating account.
Making sure that you have complied with name registration laws and banking laws in your state is critical to your success. Business name disputes can be costly to litigate and can result in huge judgements should you be found in violation of someone else’s rights of business name usage. This is also true if you violate your state’s banking laws. The best case is to be as conservative as possible when structuring your business.