Using the same account for your personal and business needs can lead to complications and challenges down the line. Opening a business banking account will help keep those finances separate, making it easier to track your business expenses and giving you access to a number of different services and tax benefits.
Whether you are founding a new business for the first time or are looking to improve your company’s financial processes, there are many advantages to opening a business checking account. Here are five of the major benefits:
- Track expenses easily.Combining your business and personal bank accounts can make it confusing and difficult to decipher how much money is actually coming into and going out of your business. In addition, it makes filing sales taxes and income taxes much harder. Opening a business account helps you easily track expenses and run reports that can show you how much you spent and when.
- Meet IRS requirements. Many businesses are required to have a business bank account by law. For example, the IRS requires incorporated businesses to have a separate business checking account. This applies to sole proprietors, partnerships and corporations.
- Access business loans. Opening a business bank account can assist you in applying for and accessing business loans. Without a business account, it is more likely that your loan request will be delayed or rejected.
- Protect your assets. Keeping your personal bank account and business bank account separate can help you protect your private assets and personal funds. For example, if your LLC encounters any financial or legal trouble, your personal credit score and finances won’t be affected.
- Present a professional image. If you want your clients, customers, and partners to take you seriously, you should manage your business’ finances through a business checking account. Having this account presents both you and your business as reliable, professional, and above board.
There are many benefits to opening a business checking account, however, not all business accounts are created equal. Depending on the financial institution, you may be charged a fee or you may have access to special services and benefits. It is important to fully research a financial institution and its business account options before opening an account.