Man, let me tell you about this whole “shell company” thing and what I went through trying to get my banking sorted out for my little side hustle. I started this practice record last year, thinking I was all set, but 2026 hit different, especially with banks tightening up like never before.
The Initial Headache: Setting Up Shop
I kicked things off just wanting to register a simple LLC. Nothing fancy, just trying to separate my personal stuff from the business. I went through the state process, got the paperwork, felt like a real mogul, you know? But then came the bank. I walked into my usual branch, where I’ve had my personal account for over a decade, thinking this would be a breeze. Nope. Not even close.
I brought all the required documents—articles of organization, EIN, operating agreement. The lady behind the counter, bless her heart, looked like she was reviewing a top-secret government file. She kept mentioning “enhanced due diligence” and “shell company indicators.” I was like, “Lady, I sell handmade leather wallets online. I’m barely moving two grand a month.”
- First hurdle: Physical Presence. They grilled me about my address. Since I work from home, I used my house address. Big red flag for them. They kept asking for a separate, legitimate office lease. I had to explain—multiple times—that this is a tiny, online operation, and I don’t need a massive office space. I had to show utility bills in the LLC’s name at my home address, which was a pain to set up initially.
- Second hurdle: Detailed Business Plan. They wanted a ridiculously detailed breakdown of my expected revenue, suppliers, and customer base. I felt like I was applying for a venture capital loan, not just a checking account. I spent two nights mapping out market segments and profit projections just to satisfy their compliance team.
The Compliance Deep Dive
After the initial branch visit, they sent everything up to the central compliance team. That’s where the real fun began. They started asking for proof of every single transaction I projected. How could I prove future transactions? It was insane. I had to pivot the conversation to my current, albeit tiny, transaction history.
What really set them off was the structure. Since I was the sole owner, they kept pushing for more information about the “beneficial owners.” They kept asking if there were hidden partners or investors. I kept saying, “It’s just me, I wear all the hats!” This “crackdown” paranoia they have is seriously getting out of hand. They treat every single new LLC like it’s laundering millions for some offshore operation.
I had to provide five extra pieces of evidence:
- Personal tax returns for the last three years (to prove income source).
- A detailed list of all my equipment used for the business (sewing machine, computer, raw material inventory photos).
- Screenshots of my website’s shopping cart and order history.
- Proof of funds transferred into the business account (my small initial capital contribution).
- A signed affidavit stating I have no other business affiliations or hidden owners.
It was exhausting. I felt like they were actively trying to discourage me from opening the account. The whole process, from the first walk-in to finally getting the account numbers, took three solid weeks. Three weeks of back-and-forth emails, phone calls, and submitting documents. I almost gave up and decided to just stick to PayPal for everything.
Lessons Learned for the Small Timer
What I realized is that banks, especially in 2026, are absolutely terrified of regulatory fines related to anti-money laundering (AML) and know-your-customer (KYC) rules. The “shell company” focus means if you look too clean, too simple, or too new, they see you as high risk.
My biggest takeaway? Next time, I’m going for a smaller community bank or a credit union first. They might still be tough, but the sheer bureaucracy of the big national chains is just too much for a sole proprietor. They are geared toward huge corporations and established businesses, not the guy making wallets in his garage.
Now that the account is finally open, every large transfer gets flagged immediately. I had a $500 payment from a supplier in China, and they froze the funds for 24 hours until I called and explained what it was for. It’s like operating under constant surveillance. The peace of mind that came with registering an LLC is constantly eroded by the banking hassle. You win some, you lose some, I guess. At least the wallets are selling.