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If you’re a business owner and you don’t have a business checking account, you might be missing a highly beneficial and crucial part of offering a professional service to your existing and potential customers.
Basically, business checking accounts are similar to personal checking accounts, except that your business will be the account owner. You can deposit the income you’ve received from your business sales into your checking account, and write checks or transfer a certain amount of money to pay any business-related expense from this account.
So, if you’ve decided to open a business checking account, make sure to shop around and make comparisons of the best online checking accounts available for you. However, if you still have doubts about it, continue reading below to know the reasons why opening a business checking account may come in handy:
- Helps You Avoid Tax Problems
One of the challenges of running a business is filing business taxes. Only a few enjoy filing out and organizing tax paperwork, so anything you may do to make your taxes much easier is a great thing.
Once you file business taxes, you have to determine the expenses and income of your business. If you’re using a personal bank account, it means sorting through countless transactions to determine which ones are for your business.
If you want to make it easier for you to file business taxes, manage your finances better, and keep track of the current performance of your business, opening a business checking account is a smart decision.
- Protects You From Personal Legal Liability
Regardless of the size of your business, it might be vulnerable to some legal troubles, including unpaid vendors or disgruntled customers suing you.
If there’s a liability problem with your business, one of the things that the court looks at is if there’s a business account and if the personal funds have been commingled with your business funds. Your assets might not be protected once the court determines that you don’t have a separate business.
- Improves Your Chances Of Qualifying For Loans
Keeping all your business finances separate can also improve your chances to qualify for loans, both for yourself and your company. People borrow money for some reason. You might like to use loans to help expand your business, or you might be required a mortgage to purchase a house. Lenders take a closer look at your finances once you apply for loans, and having your personal and business finances mixed together could make your life more complicated.
For things like car or home loans, self-employed individuals often need to go to greater lengths just to document not just their earnings, but also the consistency of their income. However, most independent contractors have business revenues deposited into their personal bank accounts. This commingling of transactions and deposits can make it hard for lenders to make a distinction between your business and household finances.
- Allows Your Business To Accept Credit Cards
You limit your potential sales and customer pool once you accept cash payments only. Most consumers pay using credit cards. With this in mind, accepting credit cards enables you to serve a bigger number of customers.
You may set up a credit acceptance system through banks using your business checking account. You can even have a merchant account through your business checking account. You may need to pay the bank extra to accept the card payments. However, make sure to check the transaction and maintenance fees before you decide to sign up for any credit processing service.
- Organizes Bookkeeping
Once you mix your business and personal transactions into a single account, you might have a tough time keeping your bank well-organized and determining crucial business financials, like profit margins.
Separating all your business transactions from your personal transactions will help keep your books clean, streamlined, and organized, enabling you to have more time to focus on what matters the most, which is your business.
Just be sure to choose the right business checking account to open since not all banks have hidden fees and unlimited transactions. If you don’t know which business checking account to consider, always seek help from an expert.
- Makes Your Business More Professional
If you often write checks using your personal checking account to buy business supplies or inventory, you risk looking like one of the amateurs in the industry. Besides, several vendors only accept payments from business accounts and certified bank checks.
Customers or clients might also be wary of dealing with you when they need to pay you personally rather than paying your business checking account. So, if you don’t want this to happen, make sure to open a business checking account.
Conclusion
There’s nothing more essential than protecting both personal and business finances when you’re a business owner. Keeping some things separate for payroll, tax purposes, and more can protect your business interests, as well as keep your personal account out of the mix.
Remember that there are some risks involved with personal accounts, so open a business checking account today and level up your business professionalism to provide nothing but satisfaction to your customers.
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