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Separate Personal and Business Checking Accounts
Business or pleasure...some people know how to separate the two. Others like to mix them together. The same thing could be said when it comes to a personal checking account vs. a business checking account. Some business owners don't see the harm in using a personal checking account for business transactions, but little do they know a business checking account can actually benefit businesses.
Do I Need a Business Checking Account?
Having a business checking account vs. a personal checking account presents a more professional image to your customers and lets them know you’re committed to your business and their satisfaction. A professional company image paired with your quality product or service can result in repeat business and good word-of-mouth advertising.
There are additional reasons why it’s beneficial to separate your business expenses and receipts from your personal finances. A separate business checking account provides a clearer picture of your business’s overall financial health. You’ll be able to react quicker, and more proactively, to cash flow situations that require your attention. Tracking expenses and receipts is made much easier as well, since costs and income can easily be grouped by week, month, and quarter, and expenditures that could be reduced or eliminated are easily identifiable.
Other Benefits of Opening a Business Checking Account:
Your business is a business and not a hobby.
According to government rules, only businesses can deduct business expenses. By using a personal checking account, it may be harder to prove to the government that your business is legitimate.
Make things easier at tax time.
If you use a personal checking account, when it comes time to declare income and expenses from the business, you will have to separate your personal transactions from the business ones. You can save yourself the time and grief by having a business checking account.
You don't want to miss deductions.
Mixing your business banking with personal banking creates a mess of transactions on your account statement. This may cause you to overlook deductions you may be entitled to. Come tax time, messy recordkeeping can cost more in time, money, and possible missed deductions.
You'll want to keep things professional.
Professionalism wins customers over. If customers are writing checks to you instead of your business, they may think that you are trying to scam them. Show them that you take your business and services seriously by having a business checking account.