Compared to using a personal bank account, opening a business account has multiple benefits. This is particularly true for managing the finances of a business more efficiently. A basic business checking account is featured with a wide array of perks and safeguarding features for a business. One can seek the advantages of tax deductions and protecting assets to so many other advantages.
Financial safeguarding of the business and personal funds
When one considers opening a business checking account, it helps one to keep the business capital separate from personal finances. This is one of the prime reasons experts in the financial sector encourage business owners to open a basic business checking account. For example, if a business is an LLC setup, the personal funds and assets will never be affected, even when the business goes into debt. Similarly, when there is a personal fund crisis, the business’s credit score will not be negatively affected.
Better and more organized expense management
When one runs a business, no matter how small the size might be, having a separate business account is always practical. One must be able to track the total expenditure, keeping a check on daily spending so that overspending on unnecessary items can be avoided. Such functions are easier to handle when there is an independent basic business checking account. It won’t be wrong to mention that expense management is better and more organized. Furthermore, it is even more beneficial to generate financial statements and reports, thereby reflecting the real status of the capital of a business.
Professionalism and easier tax management
Having a business bank account renders a more professional image to the customers and clients. Finance is simplified, and people find it easier to evaluate the business rather than the person who owns it. In addition, the payment process becomes hassle-free and faster when there is a business bank account. Moreover, a separate business bank account can experience a smoother and faster tax deduction process. Business credit and debit are separated from personal finances without causing confusion during tax evasions and others.
Opening a business bank account
One should open a business bank account the moment the business receives an EIN (Employee Identification Number) from the IRS (Internal Revenue Service) and begin with the credit and debit finances. The IRS mandates every incorporated business to own a business bank account. The rule also applies to businesses with a sole partnership, the collaboration between multiple individuals or corporations.
If the business is structured as an unincorporated sole partnership, it is not bound to open a business bank account. But it is essential when applying for a business loan. The loan lenders don’t approve loans for businesses other than business bank accounts. Furthermore, having a basic business checking account is a must when a business accepts credit card payments for merchandise and other services. In the case of a retail enterprise, a business account is also necessary when the payment is made via a point-of-sale system.