Running your own business requires a good amount of patience, planning, and organization — particularly when it comes to making money and keeping track of it. Lots of entrepreneurs begin operating their business with their personal checking account and, while there’s nothing wrong with that at first, it’s not probable in the long run.
Using a personal checking account to run your business account could result in confusion and an overall loss in profit. Here’s why you should consider learning how to open a business account and the benefits of a business checking account.
Your records stay organized
How often do you really check your own checking account? Would you be able to recite how much is in your account at this very moment? Most people couldn’t, so why would you want to throw your professional earnings and expenses into the mix?
Separating your business expenses from your own personal funds is crucial to understanding how much of a profit you’re turning and where you’re losing money. This is difficult to do when all your personal expenses and your business expenses are coming from the same place.
Having an organized sense of your finances will not help you keep a clear vision of your fiscal standing, it will also help you when tax season comes around. Organized files lead to more accurate tax filings, meaning you could get a better refund — or at least avoid penalties from the IRS.
You save — and make — more money
Speaking of tax refunds, a separate business checking account could save you a significant amount of money over time.
Starting the account is simple, and most financial institutions only charge small fees to open a business account. In fact, some will even waive any monthly fee if you either sign up for paperless statements, maintain a set amount of cash in your account or come to another sort of agreement with a banker.
And, in addition to saving you money, business accounts often offer other perks like travel benefits and rewards programs. Speak with your local credit union or bank about what kind of business checking account would make the most sense for your business.
It keeps your customers happy
And, finally, the benefits of separating your personal and professional finances stretch far beyond your own wallet.
Believe it or not, switching to a business checking account will also make your customers happier. Most people have become accustomed to paying for products and services with credit cards, rather than with cash or debit. If you have a business account, you can accept credit for little to no extra cost, which means more transactions and more money for you.
Furthermore, having a separate account for your business means you’ll sign and accept checks with a business name and address, rather than a personal one. That makes you look more professional, and it makes customers feel safer handing over their money.
Talk to your preferred financial institution about what it would cost to set up a credit system with your business checking account. Your employees and your customers will thank you.