One of the essentials in running a business is opening a new bank account. I’m talking about an account that is solely for business purposes. It doesn’t matter if you already have a personal savings account or a payroll account. For your business– it should be a separate one. Here we will make sense of that and also give you tips about opening a business bank account.
6 Reasons Why you Need a Business Bank Account
- It Offers More Protection
The first person who you should protect your business money from is yourself. That is if you want to see your business grow. Don’t get me wrong. What I mean is for separating personal expenses and business expenses from each other.
- It allows you to Clearly See Business’ Financial Status
With a separate business bank account, you’ll know that the money in there is for business purposes only. Therefore, you’ll see if it’s depleting or growing. More importantly, organizing your financial records will also be easier.
- It Opens More Payment Methods
Having a business account for your business would allow your customers to pay you in check, and through a credit card. And you know how convenient that is, right?
- It Makes Banking Easier
As your business grows so does your banking tasks. If that happens, having a business account will allow your employees to handle day-to-day banking tasks on behalf of your business.
- It Helps you File Accurate Taxes and Deductions
You may face IRS penalties if you do not file taxes accurately. And to do so, having business bank account is essential. How? Through your bank statements. Since every financial move in there is for business, you’ll clearly see how much taxes you need to pay. Unlike if your business money is mixed with your personal. Also, you can clearly see business expenses for your tax return.
- It Establishes Bank Relationship
If you have a business bank account, your bank knows you are worth investing in. Therefore, if you need a business loan in times of emergency, it will be easier.
Documents Needed for Opening a Business Bank Account
Now that you clearly understand why it’s a must to open a business bank account let me help you further. These are the commonly required documents that you need to prepare:
- Personal Identification (Passport, Driver’s License, etc.)
- Employee Identification Number (EIN) or SSN if your business is under sole proprietorship. (You can Apply Online at www.irs.gov)
- Business License
- Certificate of assumed name/DBA
- Ownership Agreement (i.e. partnership agreement if the business has multiple owners)
- Business’ formation documents or organizing documents filed with the state
Note: Your chosen bank might require less or more details. Better call them first to make an inquiry.
How to Choose the Right Bank for your Business Bank Account
You might think that it’s better to have your personal and your business account to be on one bank. But there are things you have to consider. Mainly, the bank should have low fees and good benefits. To elaborate, keep these things in mind:
- Introductory Offers and Benefits
- Transaction Fees
- Savings and Checking’s Interest Rates
- Lines of credit’s Interest Rates
- Fees for Early Termination
- Minimum Account Balance Amount and Penalty Fees
It is easy to open a business bank account. You just have to go online or visit a local branch. More importantly, you have to prepare and choose the right bank.
See Also: SECURING YOUR ONLINE BUSINESS