Legal Question in Business Law in New York

I am starting an online business where we will be accepting funds from customers, and holding the money for a short period of time (1-6 months). As it is a new business, I do not want to divulge online the type of business or why we are collecting funds (for non-disclosure reasons). We need to know if there's any legal paperwork we may need to file, and what legal concerns we need to worry about.

Do we need a financial bond, or business liability insurance, for holding funds from people?

What type of account do we need to use? We will be holding funds for ALOT of people (if the business is successful). Typically, when holding funds, we would use an escrow account for EACH person. However, because we could eventually have hundreds of users, that is not really feasible. So, we need a GENERAL account setup.

We will also be charging a fee. So, when the transaction comes in, we add our fee to it. So a person may deposit $20, and we would charge a $1 fee. The total $21 would need to go directly into one account (otherwise we are charged processing fees by our credit cards). So, this primary account cannot be an escrow account. The bank suggested an unincorporated account for these funds. Then I could transfers the fees over to our corporate account. Was that correct advice from our bank?


Asked on 1/11/11, 6:55 am

2 Answers from Attorneys
Kevin B. Murphy Franchise Foundations, APC

As a Franchise Attorney I can say this. Your questions are not appropriate for a bulletin board like this, which is meant to address simple, single questions. You need a detailed consultation with a lawyer as your multiple questions raise multiple issues. Consult with a good business or franchise attorney in your area for specific advice.

Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.

Franchise Foundations, a Professional Corporation

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Answered on 1/16/11, 7:08 am
Roman Fichman Esq. Law Practice of Roman Fichman Esq.

You asked some really good questions, however your query is missing some important information such as the industry you are in, the type of clients you are serving and the amounts is missing.

As my colleague suggested, you need to consult with an attorney admitted to practice in NY to answer such questions. I would be happy to chat with you further. Feel free to contact my office at your earliest convenience.

Roman R. Fichman, Esq.

www.TheLegalist.com │ @TheLegalist

email: Info (at) TheLegalist (dot) com

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Disclaimer: This posting has been written for educational purposes only and was not meant to be legal advice and should not be construed as legal advice. You should always consult an attorney admitted to practice in your jurisdiction for specific advice.

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Answered on 1/16/11, 7:38 pm


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