When you begin your entrepreneurial journey, you may find yourself using your personal checking account for business transactions. And you may think that is fine, especially if you are using your personal money to fund your business. However, it is important to establish a separate account for business purposes as soon as possible. Mixing your business and personal bank accounts can make it hard to organize business transactions and even harder to accurately track purchases and profits made and overall makes you look more professional.
When you have a business bank account you can do things like write checks, and those checks have your business name and overall, you seem more professional. Having a business account makes it easier to develop a business relationship with banks and being eligible for things like business credit cards and business loans. The main thing needed for a business account is an EIN, which can be applied for on the IRS website for free. When you have an IRS number, this limits you from having to use your social security number. The less you use your social security number the more you limit exposure to identity theft.
Other perks that come with having a business account is the simplified process for tax preparation. When you have your business expenses separate from personal it makes tax prep much easier for your CPA, thus a less expensive charge and the likelihood of missing out on deductions even less. With a business account you will also be able to accept credit card payments! This perk is not available for personal bank accounts so do not limit yourself in ways to get your money. When the time comes for you to expand your business into a corporation, a business bank account will be required. And when you’re ready to move on and sell your business, a business bank account can make the selling process much smoother. Buyers will want to inspect financial statements and other documents regarding the businesses financial state. When you have a business account it makes the demand for other paperwork not as necessary.
Leveling up your business by having its on bank account can help you in the long and short run. Even if you are not producing that many transactions or have that many clients still having a separate account is necessary. Do thorough research to find a bank that provides all your business needs. That is the important part. This is another crucial step in making sure your business is set up for success.