A business having its own bank account comes with its benefits. There are other benefits other than being able to fluidly perform your business transactions. While opening a business bank account might not be the first thing that comes to mind when starting a business, it is part of the first set of things to consider for your business once operations begin.
To keep track of Financial transactions
While it is easy to run transactions through your personal account at the early stage of your business, you should consider opening a business account as your business grows. This will make it easy to manage your business financial transactions, track payments and checks, track income and expenses in general.
To improve the image of your business
When you open a business account for your business, it gives your business a formal appeal. People trust your brand more when they have to make payments into your business account. It improves the image of your business. It also gives the impression that you are open for business and it will be hard for you to take off and runoff from the business.
To protect your personal identity
Business accounts are usually in the name of the business, this helps protect your personal identity. With personal accounts, there is a higher chance of being involved in identity theft as anyone can pose as a representative of the business to your customers. Also, whatever fraudulent activity that you might be at risk of is also limited to just one account other than being at risk with your personal account as well.
To build a business banking relationship
At some point in business, you need to have a business relationship with your bank. This will help your business with certain business processes such as payment of employees’ salaries, sorting taxes. Having a business relationship with your bank will help with your business growth with access to credit and financing that will assist your business with expansion.
To simplify tax preparation
When all your business transactions are in one account, it makes it easier for your accountant to prepare your financial statement for tax purpose. With a personal account, sorting through business and personal expenses can be a complex and time-consuming process. Without a business account, the accountant might have to spend extra hours preparing the financials, also, the chances that you might be paying higher taxes.
When you want to sell your business
In the event that you want to sell your business, the business account has a well-documented history of the business performance. The business account is also transferred to the new business owners. Whatever documentation you can provide in relation to your business will help in the potential sale of the business.
Certain business structures must have its business account
For businesses such as partnerships or corporation, it is necessary to have at least one or more persons as the signatory to the account. For this purpose, the business should have an account as it cannot be done with a personal account. Also, a business account is part of what makes certain businesses such as corporation a separate legal entity from its owners.
In conclusion, there are a number of reasons why you should have a business account because it is also a safer option for your business in the long run. If you do not have a business account, you should include that in your to-do list!