To establish your firm and join the estimated 33.2 million small businesses operating in the United, opening a business bank account is a wise decision. Mixing your personal and business funds raises concerns about security, liability, compliance, and other areas. Separating them can simplify the financial side of running your business. Let’s take a closer look at four compelling reasons why a business bank account is essential.
One: Depending on the circumstances, it might be necessary
An official business bank account is typically necessary for any legal entity that runs the company independently of its owner. Typically, that includes partnerships, corporations, and limited liability businesses (LLCs). A separate corporate bank account can preserve an appropriate level of legal separation.
Legally, you may not need a company bank account if you’re just running your business as an owner. But having one is always a good idea because it makes keeping tabs on your company’s expenditures and income much simpler.
Two: Reassurance It Offers
If you don’t have a company bank account, you might be playing the risky card. A commingled business and personal account creates the impression that the firm and you aren’t legally distinct entities, regardless of whether you’re employing a corporation or an LLC. Therefore, individual wealth is more likely to be at stake in litigation or comparable proceedings.
A corporate bank account can mitigate many additional dangers, including your vulnerability to identity theft. The FTC received reports of nearly 1.4 million identity theft cases in 2021. If you open a business bank account, you’ll likely need to provide an employer identification number (EIN). This will keep your Social Security number (SSN) out of the public eye, which can reduce theft.
In some instances, businesses’ accounts may also include fraud insurance. Adherence to these procedures lessens the blow of fraudulent transactions, which in turn lowers losses and keeps unfavorable remarks off your company’s credit score.
Three: Streamlining Taxes
In most cases, keeping track of tax payments and filings becomes much simpler with a professional bank account. Better quarterly payment estimates and completed annual reports are possible because of the greatly simplified tracking of revenue and expenses.
Having a separate bank account for your company also helps you come out on top during audits. Using a personal bank account for business activities opens the door to scrutiny of all your transactions, whether they are personal or unrelated to the firm. With a dedicated business bank account, auditors will only be able to access the funds associated with your company.
Four: Automates payment processing
As a general rule, a business bank account offers access to services that are unavailable to individuals utilizing personal accounts. One perk of many business bank accounts is the ability to accept credit card payments. It’s a standard feature that makes accepting payments from others easier.
With a corporate bank account, you may have access to more payment-related services. Some of the services that may be available to you include payroll processing and merchant services. Bookkeeping platform integration is also prevalent. Lastly, it is common for a company to offer debit cards to their employees. This makes it simple for approved employees to pay for business expenses directly.
