Why Do I Need A Business Checking Account?
How do your customers pay you for services rendered? And once that money is collected, where do you deposit your income?
If your answer is your personal bank account, you are setting your business up for a financial failure. You need to establish business checking and savings accounts so that you can track your business’ finances and develop a plan for growth.
Business banking accounts will help you build your credibility in so many ways. If you want to begin accepting government contracts or partnering with established businesses, you will need established business accounts. And if you want to apply for a business loan or line of credit, you will need a business account.
If you are still unsure about how business banking can help your business grow, keep reading to discover how business banking accounts can help you do business better.
Check This Out: Managing Business Finances for Business Stability
Building a Professional Business Brand
Often when we think of our business brand, our logo, our branding colors or even our website quickly come to mind. But guess what? How we do business also speaks to our business brand and its credibility.
Nothing says unprofessional like doing business with a personal checking account or even worse, no bank account at all. And by the way, CashApp and Paypal are not the best tools to manage your business finances either.
By establishing a business checking account, you’ll be establishing an identity solely for your business. You will be able to accept deposits from clients and pay vendors easily. Plus, your clients will feel confident in the financial operations of your business.
Separate and Protect Your Assets
As an entrepreneur, there needs to be a clear distinction between your personal and business finances. The purpose of this separation is so that you can protect your personal assets.
Business banking accounts protects your personal accounts from fraud such as identity theft. By using an EIN and a business account, you won’t be using your social security number to open credit accounts or conduct business.
In addition to protecting your identity, if you are mixing your business and personal finances, this is considered piercing the corporate veil. When you mix personal and business assets you are showing that there’s no real difference between you, the owner and the business. And legally, this can hurt your business. If your business is ever involved in a legal dispute and it is discovered that you have not made a distinction between your business and personal assets, your personal property–such as your home or savings–can be used to settle your dispute.
Advisors at Your Fingertips
When you open a business banking account, you are doing more than finding a place to hold your money. Your banking institution is one of your greatest relationships. Business bankers can help you discover the best financial tools for your specific business. Do you need assistance with payroll? A special savings account? A protected way of processing credit cards? A business line of credit? Banking and financial experts can help you to make the appropriate decisions for your business.
Organize Finances for Accounting Purposes
If you want to easily track your business’ cash-flow, a business checking account will help you streamline this process. You will be able to easily identify how much income your business is generating, track spending and develop a budget so your business can grow.
Check This Out: 6 Ways to Improve Your Business’ Cash Flow
Easily Identify Tax Deductions
Did you know that your business expenses are tax-deductible? The best way to prove that you’ve actually purchased items or services for your business is by using a business checking account. If you are using your personal account for business expenses, the IRS could consider your business a hobby–not an incoming generating enterprise. And guess what? Hobby expenses are not tax-deductible.
Establishing business bank accounts makes it easy for your to manage your business’ finances. When you are starting a business, it might seem easy to have all of your money placed in one account but as your business grows, it needs its own home and identity. So early on, open business accounts and make space for your business to become successful.