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The Benefit of a Business Bank Account (Why You Need One!)

A lot of small business owners start companies and continue using their own funds for everything. When money gets made, the cash comes into your personal bank account. You may also use this to pay employees, etc. 

While it seems like a normal thing to do, it’s actually a bad idea. Instead, you need to open a business bank account. Contrary to what you might believe, this isn’t an unnecessary step. If anything it’s highly beneficial! When you look at the reasons for having a business bank account, there’s one clear benefit that stands out…

Keep Things Separate

As a small business owner, you need to keep your personal and business lives separate. This applies to lots of things, but it’s mainly important for your finances. 

A business bank account lets you keep all of your business money in one place away from your personal finances. It’s an amazing strategy for business management that can lead to the following advantages: 

  • Build a separate business credit score This stops your personal credit score from impacting your company’s ability to apply for loans and financing in the future. 
  • Remove personal liability – If your company owes money to suppliers or vendors, you are no longer personally responsible for repaying these debts. It can stop situations where lenders may try to seize personal assets or money from your personal funds. 
  • Easier tracking – Naturally, it’s easy easier to track expenses and manage your finances when all of your business transactions are separate. You won’t have personal finance transactions getting in the way and potentially messing up your records come tax season. 
  • Better decision-making – Funnily enough, having a business bank account can help you make better decisions. Why? Because you have a clearer view of your cash flow and finances, meaning it’s easier to figure out if you can afford to do things or not. When the money is shared with your personal funds, you have no idea how much cash you can actually dedicate to your business. 

How to Create a Business Bank Account

The benefit of keeping things separate should be too good to neglect. With that in mind, how can you get a business bank account up and running? 

You’ll be happy to know it’s a very straightforward process that’s similar to opening a normal bank account. The main difference is that you’ll need to provide more documents and information. 

Here are the steps to follow: 

  • Research different banks offering business accounts
  • Get all your documents ready – This includes all business ID documents, licenses, permits, and so on. You’ll also need to look into obtaining an EIN through a fast and reliable service as all businesses need a tax identification number when opening bank accounts. 
  • Start the application process – You can sometimes do this online or you may have to visit the bank in-person

Just like that, your account is up and running. It’s very easy to do, but the most important part is doing the research beforehand. Some banks offer extra services or perks for business customers that could be very helpful – ensure you get the best account for your needs. 

If you don’t already have a separate account for business finances, you need to get one right away. It makes running your business considerably easier and allows you to stay on top of things without letting your personal finances complicate situations.

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