Getting a business bank account is a wise decision if you want to join the estimated 33.2 million small businesses that are already functioning in the United States and are getting ready to launch your venture. Combining your personal and business finances might have negative effects on security, liability, compliance, and other matters. Separating them also makes managing your company’s finances easier. Here are four additional reasons why having a business bank account is essential:
1. It could be necessary
A business bank account is frequently required for any entity that, from a legal standpoint, conducts its operations independently of the owner. In general, partnerships, corporations, and limited liability businesses (LLCs) fall under this category. Keeping a company bank account allows you to maintain the necessary level of isolation.
The law may not always compel you to have a business bank account if you are a lone proprietor. On the other hand, owning one can often be advantageous because it helps facilitate the tracking of your company’s income and expenses.
2. It provides defense
If your company doesn’t have a bank account, you can be liable for something. A combined company and personal account implies that the business and you aren’t functionally different entities, even if you’re using a corporation or LLC. Personal assets are therefore more likely to be in danger in legal proceedings or other similar circumstances.
Furthermore, having a corporate bank account can lower your risk of identity theft and other related issues. In 2021, the Federal Trade Commission (FTC) received notifications of approximately 1.4 million cases of identity theft. Business bank accounts frequently require employment identification numbers (EINs), which may lessen your vulnerability and lessen the exposure of your Social Security Number (SSN).
Business bank accounts occasionally also provide fraud insurance protection. These regulations reduce losses from fraudulent transactions and prevent negative comments from appearing on your company’s credit record.
3. It makes taxes simpler
It’s usually easier to keep track of your tax filings and payments if you have a business bank account. Revenue and spending tracking is easier, which enables businesses to complete their annual reports and anticipate quarterly payments more precisely.
In addition, when you use a corporate bank account, you lower your audit risk. All of your transactions, personal and business-related, could be investigated if you do business out of a personal bank account. Audits pertaining to your firm will only cover your business accounts if you use a distinct business bank account.
4. It simplifies money transfers
You frequently receive benefits from a company bank account that you would not receive from a personal account. For instance, a lot of business bank accounts enable you to take payments from clients using credit cards. It’s usually an integrated function that makes accepting payments from outside parties easier.
A business bank account may also provide additional services related to payments. For instance, you might have access to merchant services or payroll processing. Furthermore, the integration of platforms for bookkeeping is a common practice. Finally, one factor that frequently enters the picture is the ability to provide employees with debit cards, which facilitates direct payment of business expenses by approved staff members.
