Bank accounts for tenant deposits

[Dave S.]

My wife and I are taking over the property management our rental properties from the existing property manager. Our question is about setting up bank accounts. We live in WA state and our personal banker said that if we own our properties in our name and not a business it is not necessary to setup business accounts. We setup two accounts for each property jointly in our names, one account for the security deposit and one account for the operating account. We nicknamed each account with the corresponding property address. After reading more of the forums I stumbled across many people setting up DBA's. Does anyone see an issue with the way we have things setup? I don't want to overcomplicate things. We do have liability coverage already. If we did setup DBA's is it more common to use our SSN's or going an additional step to setup EIN's.

[Douglas Snook]

You did not say how many properties you own or how many accounts you are looking at. In Mass the security deposit must be kept completely separate in a special account under the tenants name so that it can not be attached by a creditor of the landlord. Multiple security deposits can be put together in one account. I don't know what the law is in WA about security deposits but if they have to be held separate then one account should do it.

Despite what the bank says you are running a business!

I know many landlord who keep a separate operating account from their personal account and then transfer money over quarterly or some even once a year. Makes it easier at tax time that all expenses have been written out of that one account rather then mixing in personal bills. They then also have a "cushion" for an unexpected expense rather then putting it in their personal account immediately when the rent is paid and spending it and then scrambling to come up with money to pay some unforseen expense.

Do you have an accountant that could point you in the right direction?