You need a dedicated business bank account if you are a business owner. Many people use their personal bank accounts, but this can make paying your taxes or handling any of your business’s financial affairs difficult. It should also be noted that business bank accounts have many advantages, such as bonuses, cashback, and the option to open additional savings accounts.
This post will explore this topic in more detail, explaining a business bank account is crucial for your business and for its success.
As mentioned in this post’s introduction, using your personal bank account for business transactions can complicate things unnecessarily. Also mentioned was the fact that when you use your personal account for business, it makes paying your taxes more difficult.
If you want to seamlessly manage your business finances, then a dedicated bank account is what you need. When it comes to filing your tax returns, all you will need to do is to print off your bank statements and then begin working through them. You will also be able to see how much you have been spending, which makes creating a budget easier.
A business bank account will help to make your business look more professional. If a partner, client, or collaborator asks you for your bank details and you provide your personal ones, they won’t take you very seriously. Your image is everything in business. If you don’t look serious, nobody will take you seriously.
There is no reason not to open a business bank account since the application process is no different from a personal account. Some accounts require credit checks, but not all of them.
Administrative work becomes complicated when you use your personal account for business. Logging, recording, and tracking transactions can be almost impossible. Your personal account will have a full record of your daily transactions, from shopping to taxis and meals.
You will have to go through perhaps thousands of transactions to find business ones. Unless your business is a start-up and you don’t have any employees, you will have to do this yourself. If you do have employees who are responsible for your business’s admin, then they will have to go through your personal payments, which is inappropriate.
The creation of reports and forecasts is essential in business. If you want your business to grow, then you need to create regular forecasts. For reasons already mentioned, using your personal account can complicate the creation of projections. Again, you will have to go through your personal transactions and separate your business from them.
The creation of forecasts is usually delegated to one’s sales team. Do you want your business’s sales department to look through your personal transactions? Sometimes, business bank accounts also come with handy apps that can make the creation of forecasts and invoices easier, but that will be covered in more detail shortly.
When you open a business bank account, your business gets its credit rating. Then, you can begin getting credit, taking out loans, and borrowing in your business’s name rather than your own. Borrowing in your business’s name will help protect you if your business begins to fail and you have to close it.
If you are using your personal account to borrow things (and your own personal credit score), then you will be the one that gets stung in the event of insolvency.
As already mentioned, some business bank accounts come with handy apps that can be used to create forecasts and invoices. For new start-up owners, creating invoices can be very confusing. However, your business’s invoices must look professional. If they do not, it can damage your reputation.
Again, the last thing you want to do is appear unprofessional. An appearance of unprofessionalism can damage your reputation and deter people from wanting to do business or collaborate with you. The same is also true for your forecasts to a lesser degree.
Lastly, when you hold a business bank account, you can speak to business advisors who work for your bank. Such advisors do not charge fees and will work with you for nothing, answering your questions and concerns. However, there is a limit to what they can help you with.
Opening a business bank account is crucial for your company’s success for all of the reasons mentioned here. If you do not have one yet, then now’s the time to open one. The application process is usually very straightforward and doesn’t take long to complete, depending on the bank.