5 Benefits of Opening a Business Checking Account
You’ve heard the saying, “keep your personal and your business life separate” before, right? Well, the same motto can be applied to your small business banking. When you open a business, one of your first tasks should be to open a business checking account and as a rule of thumb, it’s always a good idea to use one in order to keep your businesses’ money and records separate from your personal banking.
Here are 5 benefits & why you should open one.
1.Clean and organized book keeping
If you mixed personal and business transactions into one account, you might have a hard time trying to keep your bank statements organized and determine important business financials such as profit margin. Separating your business transactions from your personal transactions helps keep your books streamlined, clean, and organized, allowing you to have more time to focus on what truly matters – your business. Make sure to be conscious of the specific business checking account you chose to open, because not all banks have unlimited transactions and no hidden fees.
2. Accurate taxes and deductions
Separating business transactions into its own checking account doesn’t just help you organize financial records but also helps you file taxes. Accurately filing taxes becomes harder when you mix personal expenses in the same account. If you do not file taxes accurately, you could face IRS penalties. Also, you can deduct a handful of business expenses on your taxes, which will be easier to identify and verify if your accounts are separate. You must prove to the IRS that the expenses were for the business, so a business account statement supports your deductions.
3. Help protect from personal legal liability
No matter the size of your business, it could be vulnerable to legal trouble, such as a disgruntled customer or unpaid vendor suing you, or something equally challenging. If there is a liability issue with your business, one of the first things the courts look at is if there is a business bank account and if personal funds have been co-mingled with business funds. Your personal assets might not be protected if the court determines that you’re not running a separate business.
4. Multiple business account signers
You can have multiple signers on a business checking account. In other words, you can delegate administrative tasks to allow your employees to use your business account to run bank errands, pay vendors or complete payroll. If you do allow others to use your business checking account, be careful who you give access to. Not only for handling your money, but they’ll also have access to personal information such as a social security number.
5. You can accept credit cards
Many customers now pay with credit cards over cash; therefore, you limit your customer pool and potential sales when you only accept cash payments. You can set up a credit acceptance system through the bank with your business checking account. Or, you could set up a merchant account with your business checking account.