Why It’s Absolutely Imperative You Have a Business Bank Account
There are many reasons that a small business owner may find him or herself conducting business through a personal bank account. Maybe the business started as a hobby, and the business owner never took the step to open a separate bank account as business boomed. After all, balancing just one bank statement can be excruciating enough!
But the fact remains that mingling your business and personal funds is never a good idea. Here’s why, if you’re still banking this way, you should not pass go, you should not collect on that $200 invoice (yet!), and you should head straight to your bank and start a business bank account:
1. Make Your Bookkeeper and Accountant Happy – The financial pros who help you need a clean look at your business finances. If you make them wade through business and personal transactions, match receipts and constantly query you about whether that trip to the big box store was for office supplies (a business tax deduction) or groceries (not a business tax deduction) then you’ll end up with an unhappy financial pro – and a much higher bill for their time. (And hey, if you do your own bookkeeping and taxes, having a separate business bank account will make you happy!)
2. Make Uncle Sam Happy – Even more important than making your accountant happy is pleasing Uncle Sam. If he finds any nefarious activity – intentional or not – in your tax returns, he can come down hard on you with penalties and fees. Keeping your business and personal finances separate will allow you to be sure that you are claiming actual tax deductions. Also, this creates a clear audit trail should the worst happen.
3. Make Your Lawyer Happy – No small business owner wants to think about the chance of legal trouble. But unfortunately, the long arm of the law can often reach out, and if you aren’t careful, it can reach into your personal bank account. If your business is an LLC or S-Corp and someone sues you, your personal assets are protected…unless you have all of your funds commingled.
4. Make Your Vendors Happy – Yes, even your vendors will appreciate a business bank account. A check written on a business account looks much more professional than a check written from a personal account, and lends your business an air of credibility.
5. Make Your Customers Happy – If you’d like to make your customers’ lives easier, such as by letting them pay you via credit card, then you may need a business account. Though the prevalence of online payment processing with companies like PayPal and Square has alleviated this somewhat, many credit card processors require you to have a business bank account in order to accept credit cards from customers.
A business bank account not only makes the important people in your business happy, it helps with your organization and peace of mind. If you haven’t opened a business bank account yet, what’s stopping you?
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