It may seem easy and convenient to maintain your personal and business finances in a single account; however, this has several disadvantages. Indeed, opening separate accounts for the two can prevent you from experiencing hassles. It will offer you several advantages also.
Why You Must Have a Business Bank Account
Protection from legal liability
Opening a business bank account will protect your private property from any legal liability. When your agency gets sued and you are retaining your business and personal assets in just one account, the court would possibly go after your personal property due to the fact that your business and personal accounts might not appear as different entities.
One great benefit of having a separate account for your business is, it will be a lot less difficult in order to document the earnings of your company and expenses for tax functions.
Another good benefit of having a business bank account is, showing the tax authorities that your business is transparent in terms of the financial transactions it carries out. All the expenses and incomes need to be accounted for through the business account. Thus, if the authority of Customs & Revenue wants to have a look at your statistics, this will exhibit that you are declaring all your profits and only claiming the charges related to your business.
Opening a business bank account will lend credibility and professionalism to your firm. If clients notice that you are using personal accounts for business transactions, they may assume that you’re not running the company legally.
Tips for Opening a Business Bank Account
Having a personal bank account might not imply that you will be able to open another account for your company so easily. Moreover, your current bank may not necessarily be a satisfactory one for your company. Bear in mind that different banks concentrate on different areas. Some banks cater to small businesses and some others offer reliable equipment loans.
A few factors that one needs to keep in mind when opening a business bank account are:
- Maintenance cost of the account.
- Availability of various modes of transaction. Such as internet banking, debit card etc.
- Cost of overseas transactions.
- Interest rate charges.
- Minimal balance which you have to maintain.
Aside from opening a bank account, take into account looking for other financial products also. These include various lines of credit and cash management. If you discover a bank with large knowledge and experience in handling organizations just like yours, this could be the best bank for you also.
The banking cost is another important factor to keep in mind in case you are deciding on the best bank. Most banks these days allow organizations to open accounts for free. Also, they just require a minimum amount of balance. Sooner, the needs of your business may change and you may want to assess your account according to your charges along with the other convenience the account gives. And if you choose to upgrade your account, this could result in higher charges. Remember although that those might be offset by means of the convenience in handling the increased quantity of transactions, ease of access to the added offerings from the bank may also offset such high costs as nicely.