Do I need a small business bank account?

There are no-fee business checking accounts around. I have one through PNC Bank. I have to maintain so much in a money market account attached to the checking account. Otherwise I believe I am charged a fee such as $3 or $5 per month for the checking account.

It's not illegal to use a personal account for business purposes, but I do not recommend it.

One primary feature of a business checking account is the ability to add or drop multiple signers on the account. This is generally not possible with a personal account.

Another is that the business checking account is in the name of the business so the separation between "you" and your business is clearer. Even if you're a sole proprietor, I think it makes a lot of sense to register a trade mark for your business, and accept payments in the name of that business. That means that you need an account in that name.

A third reason is that in case of death of one of the account holders, a personal checking account could be closed automatically or be absorbed into the owner's estate.

Lastly, there is an issue with accepting deposits in the name of a business as a formal entity - LLC or corp. There are two sub-issues here.

The purpose of a business entity is to shield the owners, and using a personal account makes no sense when you are at this stage.

Also, the bank will not accept deposits in the name of a corp to a personal account. (In fact, my bank wanted a printout of the DBA paperwork in order to add a new service mark name to my existing business account so I could accept payments for that DBA.)

Not an accountant, but having a separate business account makes things easier for tax and accounting purposes down the road. Take a look at TD bank, they have no fee account for 1st year for businesses.

I used my personal account once, for a very practical and positively critical reason. I had to have overdraft protection, and I could not (yet) apply for that if I opened a new business account.

At the time, I had a lot coming in and going out. The trouble was that some of my automatic deposits (in particular from my CC processor) were often delayed at random, and I sometimes could not delay issuing checks. I did not need a 'formal' line of credit, as the most I'd ever be short was under a thousand dollars.

In cases like that, using a personal account might make sense from a practical or logistical point of view. But barring that, it's much better (for reasons already mentioned) to just setup a business account. If you use your personal account for a 'crutch' as I did, it's preferable if you do that while getting the credit you need for your company.