Published on March 1st, 2023 | by Bibhuranjan

Why Your Business Definitely Needs a Business Bank Account

Business banking is important for anyone who wants to run a legit enterprise and appear professional. Opening a separate corporate account is not always compulsory, but it offers many advantages over not doing so. This article will list and explain the reasons to have a dedicated business bank account. They include:

It Is Required by Law for Certain Structures

In some cases, having a separate corporate account is legally mandated. These include if you are operating under the name of a limited liability company (LLC) or a limited liability partnership (LLP). It isn’t mandatory for a sole trader, but the Internal Revenue Service (IRS) and the Small Business Administration (SBA) recommend it.

Financial Protection for Yourself and Your Business

The LLC structure gives you limited liability protection, as in, you would not be personally responsible for any debts or claims accrued by your company. However, you can lose that protection if you mix personal and corporate finances. For instance, if you deposit non-business-related income into your company account and use it for personal expenses, it could allow creditors to lay a claim to your personal assets in court. Having separate accounts avoids such a situation.

Business Will Look More Professional

You will look more professional in the eyes of vendors, suppliers and customers when you present a corporate account for payments. Using a personal one can lead to undue judgments from customers. For example, they might assume you are a one-person show lacking the human resources to fulfill their needs or think that your company is just starting and won’t last long.

Professionalism goes a long way in building relationships with customers, vendors, suppliers, and other important parties.

Makes Bookkeeping Easier

Having separate personal and corporate accounts makes keeping accurate records of your revenue and expenses easier. You do not have to worry about sifting out your personal expenses from your financial reports. This saves you a lot of time and makes it easy to identify business-related expenses that you can deduct from your tax liabilities.

You can also integrate an online business account with a software platform that automatically records incoming and outgoing funds. This makes preparing financial and tax reports much simpler.

Additional Loan Options

Business banking often comes with many perks, including low-interest credit facilities at rates. Opening a company account gives you access to these loans that you would not have gotten otherwise. It also makes it easy to provide the documentation needed to get approval for loans, e.g., tax reports and annual financial statements.

You Will Be Able to Accept Credit Card Payments

You can open a merchant services account with your business bank to collect credit card payments from your customers. You can also accept payments via digital money transfers, point-of-sale, and other methods. It will be difficult or even impossible to do this with a personal account. According to a recent study from the Federal Reserve Bank of San Francisco, credit cards account for 28% of all purchases in the U.S., so it will be a disservice if you can not accept payments from them.

Can Provide Customer Purchase Protection

With a corporate account, you can accept funds from debit cards, online money transfers, credit cards, mobile payments, checks, and many other methods. These payment methods have built-in protection from banks, e.g., wrong transactions can be reversed or corrected. This makes your customers and suppliers confident to transact with you.

Conclusion

We have shown you why having a dedicated bank account for your company is important and the benefits it provides. The key here is to select a suitable banking provider, e.g., Silverbird, which lets you transact in 30+ currencies and accept payments from around the globe.

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Tags: banking, business bank accounts, business banking

About the Author

Bibhuranjan Editorial Officer, technofaq.org I'm an avid tech enthusiast at heart. I like to mug up on new and exciting developments on science and tech and have a deep love for PC gaming. Other hobbies include writing blog posts, music and DIY projects.