When it comes to your small business, you’re sure to have a solid marketing plan. But what sort of plan do you have for managing your finances?
Your business is going to have plenty of incoming and outgoing expenses each day, but many small business owners think it’s easy to just use their personal bank account to run the company.
However, this is never a good idea, and it can lead to serious problems. Instead, open a separate account to enjoy the benefits of a business bank account.
To learn why this is so important, keep reading to find five key reasons why your business must have its own bank account.
1. Separate Bank Accounts Make Tax Time Easier
No one particularly enjoys tax time, but when you run a business, it becomes even more complex. Business owners need to pay quite a few taxes, including income, sales, payroll, excise, and property tax.
However, when you open a business bank account, tax time becomes simpler. If both your personal and business bank accounts are combined, you’re going to have to spend days combing through each transaction, working out which ones are personal and which are related to the company.
When accounts are separated, it’s much easier to work out your income and expenses. The best small business bank account will provide income reports for each month, making it simple to work out your finances.
The larger your business, the more complex tax time becomes. We recommend working with a business accountant to ensure you’re getting back as many deductions and savings as you can.
2. Looks More Professional
Another top reason to open a business bank account is professionalism. Do you want to have to ask stakeholders or contactors to make out a check written out in your name?
It looks unprofessional if a business doesn’t have its own bank account. You want checks payable to the name of your business, giving people confidence that your business is legitimate.
If you were paying a business, but they asked for a check made out to an individual, would you find them trustworthy? Probably not. Customers want to be sure their payments are going to the right company, so business accounts make it easier for them.
As an added bonus, having checks made out to your business instead of yourself provides more security and privacy, as you don’t need to give out your full name to everyone involved with the company.
3. Additional Protections for Customers
A business savings account is not only beneficial to you, but also to your customers. Business accounts usually provide additional protections to customers when they do business with your company.
They may make it easier for customers to access consumer protections, such as returns, complaints, or exchanges.
This is especially true if your company offers e-commerce, as security is extremely important when it comes to online purchases. When shopping online, customers need to enter their credit card details, name, and address, so you want them to be sure both your business accounts and websites offer the highest levels of security.
4. Better Liability Protection
Liability is another big reason to open a business account—keeping your personal finances separate also protects them. If your finances are combined, someone could sue your business—and you may be liable for your company’s debts.
Keep your personal finances safe by separating them from your company in case of a lawsuit. Unfortunately, even the best-run businesses can be vulnerable to lawsuits, so don’t take the risks.
It can be helpful to work with a business lawyer to create a structure for your business that will best protect it. Documenting everything, in writing, will also help prove your case in a court of law, if it comes to that.
5. Make It Easier to Run Your Business
Let’s face it—running a business can be tough. In the early days, you may find yourself working long hours, for low pay.
To make things easier for yourself, it’s helpful to streamline as much as you can, saving yourself time and effort. With business bank accounts, you get access to extra features from your bank which can help you manage your finances.
They may make it easy for you to take debit and credit payments online. Or, they may offer payroll software or easy integration with invoicing and accounting software programs, like QuickBooks.
There may sometimes be small monthly fees to access these services, but it’s worth it for the convenience they provide. If you’re looking for particular services for your business banking, it’s best to talk to a few banks until you find the plan that’s right for your needs.
Start Enjoying These Benefits of a Business Bank Account Today
As you can see, there are plenty of benefits of a business bank account—for both business owners and their customers. In the excitement of starting a new business, don’t neglect your finances and make sure to open a separate bank account.
To get started, research local banks and see what each can offer in terms of business plans. Then, make an appointment to open your new bank account.
When opening a business bank account, you’ll most likely need to bring along your SSN or EIN, your business license, and the company’s formation documents. Before you know it, your new bank account will be up and running, giving your company financial freedom to thrive.
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