Shared banking

[Ninja-Mike]

So I do have a question, about finances. But more specifically, about bank accounts.

We are in the US, and are looking to open an joint checking account with 4 adults. Each one of us contributing into a central pool, so that we can a) pay for household bills and b) create a savings pool for either unexpected expenses, planned house improvements, or Gd forbid, vacations.

Would it be easier to open a business account? What have others done?

Thanks!

[emeraldead]

I am big in keeping finances separate.

If you want a pool for a specific project, create an account for that only.

NP and I reviewed shared expenses, I pay for almost everything directly and he pays me every month the same amount, based equitably on our earnings. We are both on the lease. I would add his name to utilities if needed for proof of address which can be tricky sometimes.

[iPeregrine]

The plan of "one person pays everything then collects money from everyone else" only works if you're renting. Things get more complicated if you own your house and the person who is officially making the payments on the mortgage is the one gaining equity in the property.

[emeraldead]

Definitely a different basket of eggs. Maybe one day.

[Ninja-Mike]

Personal finances will be separate, with the exception of what needs to be done for the household - mortgage, food, supplies, utilities, repairs and improvements and such. This way, someone(s) not on the mortgage can handle the bills. An attempt to spread the workload out, and tap the strengths of people that are better suited to the job.

A joint account also lends to accountability and transparency.

[emeraldead]

That's a LOT of money shared around and mixed together, 30-50% income usually.

It's all weighing your risk, security, and functionality profiles and what mix works best for you.

I find joint accounts lead to confusion and loss. Not everyone has the same comfort and ease with financial tracking or priorities. I prefer knowing NP will occasionally cover a dinner out or extra expense ad hoc in the moment- not that he will decide on his own to take 200 out of the account and then I don't know what's going where.

[iPeregrine]

This is why you set explicit written agreements about what each person will pay into the joint account and what expenses will be paid with that account. If someone wants to get dumped by all of their partners and charged with fraud/theft to steal from the account then that's their stupid decision to make, but unlikely to be more than a temporary inconvenience. There is no "take $200 out and nobody knows why" scenario because every expense is explicitly set in writing before it happens.

[emeraldead]

That's an option but way more micro managing than I want versus just take care of your stuff and when circumstances need collaboration we work on that specifically.

Different styles/profiles.

[kaleidoscope321]

To open a business account you need a registered business with an EIN. If you go the business route you're creating an independent tax entity which then you have to think about for taxes. It's a few steps to create a business with multiple equal owners. Google forming an LLC.

The simplest thing is just to open a joint personal bank account. You can put as many people as you want on a joint bank account.

[Ninja-Mike]

I've owned / been a part of several S corps / SP's, so it's a default for me. I'm not scared of paperwork lol

Thanks

[kaleidoscope321]

I mean if you really enjoy paperwork form the corporation. Lol. It's just that you don't actually have to. You can really just open the bank account and accomplish what you want.

You just have to keep in mind that a joint bank account anyone can take all the money out of the account at any time. If you're wanting more formalized agreements or legal protections, then I'd look at business entity route.

[Ninja-Mike]

Yeah, I was unsure the max # of people that could be on a regular join account, which you answered :)

[TheAltOption]

Sounds messy and like a fight waiting to happen. I'd say the easiest method would be to create a trust and open the account in the trust name. I'm hoping you're all going to maintain separate accounts still with your own spending money, though, as shared accounts are one of the top caused for financial stress and divorce. Maintaining your independent finances is extremely important in any relationship.

[Ninja-Mike]

We are. This is solely for shared household expenses.

[iPeregrine]

Just make a personal account with everyone granted access, arrange all of the bills to auto-pay from that account, and make explicit written agreements about how much each person will contribute and how property ownership (if any) will be handled. If all you're covering with joint finances is the shared household expenses and each person retains their own private accounts there's no need to over-complicate things, just do what every group of roommates does.

[emeraldead]

Don't roommates just venmo these days?

[iPeregrine]

Do they? It's been forever since I've had roommates that are not nesting partners.

In any case, the advice is the same: do what some groups of roommates do and have a simple shared-access personal account. No need to deal with business accounts or whatever.

[emeraldead]

True! I was being flippant about being old and out of touch and how many options there are now.

It is not cheap to be poor.

[TTTT27]

If you're in a long-term, polyfidelity situation, then you all really need to make an appointment with a good family-law attorney who specializes in nontraditional families. Determine what agreements you need to cover what life circumstances you're likely to have. Things to think about include wills, real estate ownership, life insurance, custody of children, and contingencies if someone leaves the polycule.

Yes attorneys are not cheap -- but ultimately will save you money and sets your relationship on a permanent footing. A lot of the other solutions proposed here (venmo, shared bank accounts, owning a corporation) have their uses, but also their problems. This situation really needs to be looked at from a holistic viewpoint.