If you run your own business, a business checking account can help you hold and manage the money your business earns. Business accounts operate much like personal ones, but they may provide you with more legal protections. What’s more, getting a business account not only helps your company look more professional, but depending on your business structure, it may be legally required.
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Anyone who needs to manage finances for their business should consider opening a separate business checking account, as they provide a broad spectrum of valuable benefits, which we will discuss below.
You can easily explore your business checking account options online today or get started by using the table below.
5 reasons why you need a business checking account
Here are five great reasons why owners should get a business checking account now.
- Keeps your business taxes organized
Individual business owners who expect to owe more than $1,000 on their tax return, and corporations expecting to owe at least $500, generally need to make estimated quarterly tax payments. A business checking account can simplify the process of calculating your estimates since it details your business expenses and income in one place, separate from your personal finances.
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It’s essential to avoid intermingling your business and personal finances for accurate record-keeping and tax compliance. Some checking accounts allow you to grant third-party access, enabling you to delegate some of your financial management tasks. This feature makes it possible for your accountant or bookkeeper to have their own login to manage your account on behalf of your business.
- Reduces personal liability and risk
One of the primary benefits of keeping your business transactions separate is to limit your personal liability. Remember, before opening a business account, you may need to register your business as a business entity, such as a sole proprietor through a DBA (doing business as), limited liability company (LLC) or corporation. An LLC or corporation designation could give you some legal protection, but your personal assets could still be at risk if you mix your business and personal finances. Consequently, the IRS and other creditors could pursue your personal assets to collect a debt.
Business bank accounts can also help you keep important personal information private. Specifically, you can open your account with your business’s employee identification number (EIN) rather than your Social Security number. Keeping your Social Security number private is essential for fraud protection with companies that process a large number of transactions.
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Because of these reasons, it’s vital that business owners get the protection they deserve. It’s easy to research your business checking account options online or simply use the table below now.
3. Accepts credit cards and other forms of payments
Perhaps the biggest advantage of a business checking account is that it enables your business to accept credit card payments, ACH transfers, wire transfers and other types of payments. Having the ability to process multiple forms of payment makes it easier for your customers to pay for products, services and invoices.
If you want to process payments with a personal bank account, you’ll need to use a payment service provider. By contrast, business bank accounts are set up to handle different types of payments to give your customers more options, though you may incur more fees than with a personal account.
4. Helps your business grow
As your business grows, you may have several different people in your organization responsible for paying vendors, signing payroll checks and other financial tasks. In this case, a business checking account is essential because it allows for multiple signers.
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A business checking account also helps you build a relationship with a bank or credit union. By managing your business account responsibly and maintaining a good relationship with your bank, you may be able to obtain business credit for loans. Having a bank willing to extend credit to you can be valuable when you need financing to grow your business or cover a new project.
5. Lends credibility and professionalism
A dedicated business bank account can help your business look more professional. Clients and customers can make checks to your business name or pay you with credit cards, electronic payments and other types of payments.
A business checking account is more professional in appearance than a personal account. Your clients may view you as a more established and trusted business if their payments go straight to your business account, not a personal one. And in business, trust is a valuable commodity. 81% of consumers cite trust as a deciding factor in their buying decisions, according to a joint consumer confidence survey by Clear Channel UK and JCDecaux UK.
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How to open a business checking account
You can open a business checking account easily by visiting your bank’s website or their local branch and filling out the necessary paperwork. But you don’t have to necessarily use your current bank, either. There are multiple institutions offering business checking accounts, many of which you can explore online here now.
When opening a business checking account you may need to provide some of the following documents:
- Employer Identification Number (EIN), which you can obtain through the IRS website.
- Business registration documents that detail the formation and legal structure of your business.
- Business license or certificate or incorporation
- Ownership agreements that legally define ownership interests, operations details, and other vital information.
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The bottom line
Opening a business checking account can benefit you by separating your personal and business finances, which helps to keep accurate records, comply with tax regulations and limit your personal liability. As with most financial products, it’s a good idea to shop and compare different providers to maximize your benefits. Look for business checking accounts with the lowest fees and most attractive benefits, such as beneficial introductory offers and higher interest rates. Use the table below to get started today.
