It’s tempting to think that a savings account is just a boring way of keeping money safe. But in reality, it’s a smart move for businesses large and small.
If your business doesn’t have its own savings account, you can’t access the money when you need it most. That means if there’s any kind of emergency (like payroll!), you’re out of luck unless other people are willing to help out with cash flow issues.
The good news is that savings accounts are easy to set up and manage, plus they make good sense for businesses of all sizes. Here are ten benefits of a savings account that are in your best interest:
Save for Taxes
Taxes are a part of running a business. If you do not pay taxes on your profits, the government will take them from you. The FIRS requires that all businesses must have an incorporated entity; otherwise, they can’t file their own taxes and must hire an accountant or CPA (certified public accountant) to do it for them.
If you’re not sure what this means for your business and how it affects its finances, keep reading!
Save for Expenses
Many people find it hard to cut expenses, as they simply believe it’s too hard. But the first step to cutting expenses creating a savings account.
Earn Automatic Interest
The benefits of earning interest on your savings account are many. In fact, the importance of having a savings account cannot be overstated; it is one of the most important financial tools you can own as an entrepreneur.
You should also know how to determine which type of savings account is best for your business and how much interest you can expect to earn from each option.
Provide Emergency Funds
If your business is subject to unexpected costs, it’s important to have an emergency fund on hand. This can be used for any financial need that arises—from replacing equipment or paying for a professional service such as legal advice or accounting services.
To build this kind of savings, start by writing down all the financial obligations you have in one year and then adding up what they would cost if they happened today (like paying your employees). Next, prioritize these expenses based on their severity and urgency so that the most urgent bills go toward building this fund first. Once those bills are paid off, work backward through each month until there isn’t any money left over in your checking account at the end of each month; then put that money into savings until next year when it will be needed again!
Keep Business Money Separate
If you use an individual retirement account (IRA) or other savings account to keep your business money separate from your personal finances, then it’s important that you do so. Businesses should not use their business accounts to pay for expenses like taxes or personal debts; doing so can create a conflict of interest between the two types of finances.
If this is something that concerns you, then consider using a business checking account instead of an IRA or savings account.
Take Your Business Anywhere
You can take your business anywhere with a savings account. You don’t have to worry about carrying cash in case you need it, and you can use a debit card at any ATM. If you’re planning a vacation or business trip, having the money available right away will make things easier.
You may also want to consider opening an account at home so that if something happens while traveling abroad (like someone having their wallet stolen), they’ll still have access (and more importantly) control of their funds!
Access to a Checking Account
A savings account also gives you access to a checking account. This can be extremely useful for your business, as it means that you have the ability to make both online and offline payments by transferring funds from one account to another.
You can also use this feature for bill payments and payroll purposes. You may want to pay employees through direct deposit or electronic transfers, rather than mailing checks or paying them in person at their office location (which could be difficult if they’re on vacation). With a savings account, you can easily access all of your employee’s paychecks electronically without having them come into the business itself—and without having someone go through the trouble of physically delivering cash every time!
If there are any deposits coming into your bank account every month (like a paycheck), then this will allow them to be; otherwise, they’ll only be available if they’re deposited manually by hand (such as in an envelope). It’s important not just because it speeds up how quickly money gets transferred between different accounts but also because many large businesses don’t want anything happening outside their own walls: no matter how secure those walls may currently seem but still need some weaknesses patched up before being locked once again.”
Use Savings as Collateral for Loans
You can use your savings account as collateral for a loan. If you have an outstanding balance in your savings account and the bank agrees to lend you money, they will count this amount against the total of your other assets that are available for collateral. This way, if something happens and you’re unable to pay back the loan (for example: losing your job) then at least some of what was borrowed from them through their security interest will be protected by having other items pledged as collateral.
A savings account is also useful because it allows businesses to build up a buffer between themselves and their creditors—a buffer that could help protect them from unexpected financial difficulties such as unemployment after being laid off from work or even bankruptcy due to illness or injury sustained during working hours!
Make Payroll Easy and Affordable
- Make Payroll Easy and Affordable
A savings account can help you make payroll easy and affordable. You can set up direct deposit, which means your employee’s paychecks are automatically deposited into their bank account without having to go through a check cashing service or another intermediary. This saves time, money, and effort on the part of both you and your employees.
- Avoid Paying Fees
If you opt for direct deposit instead of having paper checks made out for each paycheck, there are no fees involved in setting up this system—making it an attractive option for businesses that want low overhead costs but still need to pay their employees regularly every week or month (or even year).
Conduct Online Banking 24/7
If you have a business, it’s likely that your bank has an online banking platform available for checking accounts and other services. This can be convenient for keeping track of your finances, transferring funds between accounts and paying bills. Some banks even allow you to deposit checks electronically through their website so that they’re ready for pickup at the post office or another location where they’ll be accepted without any additional steps required from customers themselves.
As you can see, a savings account is a great way to save. But there are other benefits that come with it, too.
- It helps your bottom line. The money in your savings account can help pay bills and expenses like taxes and retirement planning or even cover an emergency expense (like replacing the roof).
- You can earn interest on your money—and earn more than if you had just kept it in checking or another type of credit card account at the bank.
- You can take your business anywhere—as long as there’s an ATM machine nearby!
If you’re looking to establish a savings account for your business, there are many benefits to having one.
A savings account can provide you with a secure place to keep money that is easily accessible, but not available as collateral or as part of a loan agreement. In addition, if you need more funds than traditional bank accounts allow (or if they are simply unavailable), opening an online savings account can help!
These types of accounts are typically free from fees and offer several powerful tools such as fraud protection or even mobile access on tablets or smartphones so that you never lose track of your assets when away from home or work.