This is one of the common questions I get from my students who are starting their small businesses. Opening a business account for your business can be a daunting task, and because it is not so necessary, you may think of delaying it, or worse, not opt for it at all, especially if you are only getting a few transactions every month.
However, a business account for small business can make a lot of difference. There are benefits to having a separate bank account for your business transactions. Here are five reasons to open a business account upon starting a business:
A Business Account Promotes Accurate Bookkeeping.
Imagine your bank statement that features your personal expenses, business expenses, and business earnings.
With so much going on in your business, it will be difficult to distinguish which comes from where.
And as your business grows, your transactions will also grow with it. Delineating in great detail these transactions during the tax season would be time-consuming.
Now compare it to having a separate and clean business account that records all of the transactions only related to your business.
By keeping your invoices and receipts, matching them with your bank statement entries, you can easily spot on if you are hitting the targetted goal or not.
Make Your Small Business More Professional.
Having a business account will prove that your business is not a hobby, even if you are just running your business from home.
When you write an invoice to a client, they would feel that the invoice comes from a legit company. When you write checks to suppliers, it means the money is coming from a business.
Having a business account proves professionalism and organization. Remember, having your business and personal expenses in one account can make you personally liable for any actions of your business.
You Can Have More Spending Power With a Business Bank Account.
The bank usually allows bigger purchasing power for businesses.
This means your business can make a large startup purchase which can help in establishing a credit history.
If you want to build a business banking relationship, which is necessary as your business grows, opening a separate bank account can help you build it.
A Business Account Allows You to Sell Your Business
When the time comes that you want to sell your business, one of the requirements is having a business account tied to your business.
Once the business is sold, the bank account will also be transferred to its new owners.
Having a separate business account also documents and shows the financial history of the business – whether it’s doing well or not.
A Business Bank Account Can Enjoy More Benefits.
This includes better interest rates even if it’s only for a short period of time.
Many banks also have introductory offers. That may mean free banking or low transaction costs.
With the above reasons, there are no reasons why you delay opening a business account for small business. In starting a business, this is one of the important steps to take to avoid any future headaches.
I elaborated more business tools on my Passion Hustles workbook. I also covered the following lessons:
- Identify Your Purpose and Develop a Passion Hustle Idea
- How to Define a Brand Your Customers Will Love
- How to Manage Your Time Efficiently
- Essential Business Tools that You Should Have Right Now
- Having Accountability Partners and a Solid Community
- How to Build a System that Works and Ensuring Quality
- Finding Your First Customers and Making a Sale
- How Social Entrepreneurship Helps in Developing Solutions for Social, Cultural, or Environmental Issues
- Basics of Copywriting to Get More Sales
- Business Innovation, Ideas, Trends to Look Out For
What do you think of the above 5 reasons to open a business account for your business? Do you have any experiences with opening a separate bank account? Feel free to share it in the comments below!