As a freelancer, I know how tricky finances can get. I’m just one person, so most people don’t consider me a business owner. I’ve actually learned that most people don’t even know how to classify what I do – they just say I work from home.
That, of course, never seems like a legitimate job to people who have never worked from home. In any event, due to the lack of understanding of what I do, trying to do things – like opening a business bank account – has always seemed like a bit of a challenge. Most people think and suggest that you need to run an “actual business” to qualify for such an account.
And with conflicting information, it can be really hard to determine what I am able to do. And as an Uber driver, you might face something similar. Can you open a business account?
Should you even want to? The answer to both questions is, “Yes.” Let’s dive in a little deeper below.
Can I Open a Business Bank Account As An Uber Driver?
Let’s start with the obvious that seems to not be so obvious to some folks: you are running a business. It doesn’t matter if you’re an Uber driver, a freelance writer, you sell homemade jewelry, or you cut everyone’s lawn in your neighborhood. If you perform a service or make a product in exchange for money, you own a business.
Now that we’ve established that, understand that if you own a business – whether you are the only employee or you have two million employees – you can open a business bank account.
Do I Need a Business License?
There was a time that in order to open a business bank account, you needed a great deal of paperwork – including a business plan. As you can imagine, this was not the easiest thing for someone with a side hustle, someone who worked from home, and even brand new brick-and-mortar businesses starting out. Fortunately, for us mere mortals, this has changed.
Yes, there are still some banks that require more than you and I could probably ever provide from our little corners of the business world. There are, however, some institutions that understand and embrace the world of freelancing, side hustles, and the gig economy. They saw a gap in banking needs and created some business bank accounts suitable for Uber drivers and the rest of us who don’t make a “traditional” income.
Even the loan industry is catching on. For these very nice institutions, they don’t require much. In fact, many of them require nothing more than your information and your social security number.
The key is simply to research different banks and institutions to compare their benefits, terms, and requirements.
Do I Really Need a Business Banking Account As An Uber Driver?
Yes and no. “Need” can seem like a strong word. Do you legally need a business bank account as an Uber driver?
No, no you do not. In fact, no sole proprietor – that would be us – is legally required to have a separate account. So, no, you don’t “need” one in that sense.
If you’re asking, however, if you should have one, and would that make your life a little easier? Yes and yes. Let me pose a question to you before we kick this answer off.
Have you filed your taxes as an Uber driver yet? If not, you’re in for a real treat if you don’t have a separate account. If you have filed your taxes and you don’t have a separate account, how long did it take you to do that?
How many hours did you spend pouring over your bank statements with a pen and highlighter, trying to differentiate between business expenses and personal ones? Just like everyone who makes money from a product or service has a business, we all also have business expenses. Freelance writing is just one of my freelance positions.
Most people don’t think that this costs me any money, but it does. I have to pay for the highest internet package in order to accommodate my workload. I have office supplies that are necessary to meet my work responsibilities.
I have to have specific office equipment, including a good laptop that can manage my needs. There are also monthly charges for different writing, communication, and other software that the free versions just don’t cover. These are just to name a few.
If I pay for all of the expenses from the same account I pay for my children’s shoes and clothes, my house payment, utilities, and other bills, tax time gets really complicated. As an Uber driver, you have expenses, too – fuel, additional vehicle maintenance, and so on. If you pay for these out of the same account you pay for gas to head to the movies or other regular expenses, you’re going to have a really fun time trying to split them up on your expenses.
The better way is to open a business bank account. Let all of your pay from Uber driving go into that account. Keep the amount you need for business expenses – and a little extra for emergencies – then transfer the rest to your personal account.
What you transfer is your personal pay. Then, when you need to fuel up before rides, you pay from your business account. When tax time comes, everything is already separated for you – which is really good if you happen to get audited.
Can’t I Just Open Another Personal Bank Account?
Sure, you can always just open another personal account for your pay and business expenses, but you might not want to. On the one hand, you’re keeping everything separated this way, so it’s beneficial. However, a business bank account gives you some additional benefits.
One awesome benefit is that many of them do the calculations for you. They track and itemize your business expenses so that you don’t have to. Need to know how much you spend on fuel each week?
Done. Need to determine how much of your pay needs to stay in your business account for expenses? Done. No need to break a sweat.
Another great thing is that many of these accounts integrate with other accounting and other business software. Once you’ve linked them, you can completely simplify the administrative side of your business. And who doesn’t want that?
As an Uber driver, you don’t have to look far for a separate business account. Uber has decided to help drivers out by offering a checking account and debit card to you guys. It offers benefits like cashback and discounts at merchants.
Be sure you take a look at this option when you compare different business accounts. To review, yes, you can open a business bank account, but you don’t have to. However, doing so can save you a lot of time and frustration headaches, so it’s definitely worth considering.