January 15, 2021
7 Benefits of Having a Business Account
Starting your very own business is one of the most exciting yet daunting experiences you’ll ever have. In addition, thousands or even millions of dollars are often at stake during the beginnings of the company. This can make even the most confident of entrepreneurs break a sweat. The best way to make sure that funds invested and accumulated during your company’s life are safe is to open up a business account with your local bank. So, why is this such an important step? Read on to learn seven benefits of obtaining a business account for your company.
1. Reduces Mixing of Business Funds
Perhaps the most common mistake made by new business owners is mixing their personal and business assets into one account. They assume that they can clearly distinguish money from their own assets separately from those coming from the business. Any accountant can tell you that mixing the two sets of assets this is a really bad idea. Not only do you run the risk of misappropriating investor funds, but you can also find yourself in trouble with the IRS if tax information eventually comes out as false.
2. Increases Capital Obtaining Opportunities
When investment groups or individuals are looking to provide you with capital, they want to know that their funds are going toward something real. Having a business account demonstrates to them that not only are you serious and a professional but that you have clear evidence of cash flow.
3. Corporate Veil Protection
In the event that you find yourself in trouble with your company, a business account can be shown as proof that your assets aren’t tied with your company’s assets. This protects your personal assets in the event that creditors attempt to collect debts.
4. You Look That Much More Professional
Oftentimes, it is not the client that is the most difficult to capture but your vendors. Vendors are often very busy and will only help companies manufacture their products if they deem it worth their time. Sending checks from your personal bank account looks sketchy and unprofessional. This can make them feel uneasy and thus cut ties with you.
5. Processing Time is Reduced
As a business, you’re going to have a lot of transactions occurring at the same time. A business account is designed to handle large amounts of transactions at a time and thus reduces the time needed to be approved and ultimately for you to receive your funds.
6. Protects Personal Identity
As stated above, you’re going to see a large number of transactions happening within your business. If you’re using your personal account to complete these, then you are placing yourself at a high risk of identity theft. Not only will your business assets be at risk, but your personal assets are also in danger.
7. Improved Bank Relationship
The more sales you make, the bigger your company begins to grow. Therefore, it is important to establish a solid relationship with your company when the time comes to add additional accounts or to apply for a loan. Starting off with a business account allows you to be familiar to the bank and thus obtain the institution’s confidence when seeking to open a payroll account or another business fund.
If you’re considering opening a business account, these are just a few of the ways that you will see benefits.