Why Every Small Business Needs a Business Bank Account
Some business owners – especially those leading companies with just one or two employees – often think they can tackle any of their business banking needs by using their existing personal bank accounts.
Think again.
A business bank account isn’t just a smart move – it’s one of the first things you should check off your list when you’re establishing your fledgling company. Not only do they provide a few extra benefits, but they also can help you protect your own personal finances.
Here are a few reasons to open your own business bank account, and soon!
Protection: Having a business bank account affords a few different types of protection, legal or otherwise. For one, while limited liability companies (LLCs), corporations and other business structures shield you and your assets from business-related issues, that protection can be stripped away if you’re comingling your personal and business funds in the same account. Business accounts also protect you from yourself. If you keep your personal funds separate from your business funds, you’re much less likely to endanger your own personal finances by pouring them into your company when times are difficult.
Fewer Headaches: Mixing your personal and business finances also simply makes it more difficult to keep track of your funds for accounting purposes. That’s problematic for several reasons, such as the added difficulty of assessing your current financial situation and making accurate forecasts. But also, small businesses often utilize several tax strategies, deductions and exemptions to lessen their financial burden and stay afloat – mixing personal and business finances can improve the chances of errors come tax time, which could affect your eligibility for these lucrative tax breaks.
Professionalism: Nothing raises more eyebrows when making a large payment to a business client than whipping out your personal checkbook or personal credit card. It conveys the message that your business is new, that you’re a novice and that the company may be limited to whatever is in your checking account at any given moment. It’s an intangible benefit, but a business bank account gives your company an air of professionalism that will make other companies think a little more positively about you in the future.
Business Account Perks: While business checking and credit-card accounts often carry higher costs than personal accounts, they often include benefits that make the cost worth it. For instance, business accounts can allow for multiple authorized signers or let your business to accept credit- and debit-card payments. If your business has a high volume of transactions, you might even be eligible for an “earnings credit rate,” or ECR, that you can use to pay off some of those bank fees.
Looking for more answers about business bank accounts, or just more expertise in general on how to handle your small-business finances? Look no further. McManamon & Co. offers a wide range of services to small- and midsize businesses, from general consulting to outsourced CFO, accounting and bill pay.
Learn more about business bank accounts, as well as other moves you can make to simplify your life as a small business owner. Call us at 440.892.9088 or contact us online today.
Tags: accounting, McManamon, small business, small business bank account | Posted in accounting, McManamon & Co., small business