Want to get started on the right foot? Many business owners start out by using their personal checking accounts. But as the business grows, a separate checking account may become necessary. Start your business with its own account, and you’ll avoid having to keep meticulous records of business versus personal expenses.
Plus, a business checking account allows you to understand your business cash flow and profitability, prepare records for tax filings, and build credibility with bankers and investors.
What are the benefits of having a business bank account?
Get the right business account for your startup, and avoid the hassles of having to untangle your personal and business transactions down the road.
It’s important for your business to have accurate accounting—which means isolating business income and expenses. Accounting can be a much less time-consuming and tedious task when your business expenses aren’t commingled with your personal expenses.
Understand your business’s cash flow.
One of the most important tasks for a startup is establishing a positive cash flow. But what if you can’t tell whether you have positive cash flow? Or what if you don’t know until months later? Mixing personal and business funds can make reporting and analysis difficult.
Having a separate bank account can save time by automatically separating transactions at the time they occur, rather than requiring you to manually do it later. Plus, it means your records are more likely to be accurate.
Protect personal liability.
Different business structures—LLC, partnership, sole proprietorship, or corporation—provide varying levels of separation between the business and the owners and managers. Your CPA and attorney can advise you on the best business structure for your situation.