Business Banking 101 (Part 1): Why You Need A Business Bank Account

Whether your business is brand new or you are well established, it is important to keep your business transactions separate from your personal transactions. A business bank account will help you grow your business while protecting you and your business at the same time.

Better Recordkeeping

Having a separate account for just your business income and expenses will help to alleviate the problems that can occur when you intermingle the funds. Compiling monthly financial reports will be easier and less time consuming if you don’t have to sort through all of your personal transactions to identify what should be attributable to your business.

You will have a better handle on your business cash flow and thus be able to manage your budget with confidence. Having organized records will save you (and your bookkeeper) hours of time during the year and reduce the stress at tax-time that comes with sorting through a years worth of transactions.

Protecting Yourself

Many small businesses are organized as Limited Liability Companies (LLC) in order to protect the business owner. An LLC is a separate legal entity organized so that the owner(s) can not be held responsible for the debts of the business and so that the business owner’s personal assets are protected.

Should the owner of an LLC intermingle business and personal funds in the same bank account, they are putting the protection of the LLC status at risk opening up the possibility that personal assets can be used to pay off business debts.

If you are a business owner and don’t yet have a separate bank account for your business, I highly recommend you start researching your options.