Opening a bank account for your business comes with an abundance of benefits for yourself, your business, and your clients. We have created a list of benefits to opening a bank account for your business, what to consider before opening a bank account for your business, and steps to opening a bank account–whether you are a brick-and-mortar operation or an online business.
Benefits to opening a bank account for your business
Opening a bank account for your business can add credibility and respect to you, the business owner, and your business. It shows your level of commitment and dedication, and you take your business seriously. When you take yourself and your business seriously, others will begin to do the same. Business transactions are also more professional when payments are made to your business than you personally.
Clean Financial Record
Separating your business and personal finances is beneficial when it comes to tax season. Having to determine your business expenses and your personal expenses is a huge headache and is something you want to avoid.
In addition, a clean and accurate financial business record is crucial for a less stressful IRS audit. You want every business invoice and expense to be accessible through a clear trail.
Limited Liability Protection
Limited liability protection, simply put, protects your personal assets if your business encounters and obtains legal liability. Having a separate bank account for your business prevents creditors, such as the IRS, from taking your personal assets to settle debts you may have incurred over time.
Option for a Line of Credit
In the world we live in, you never know what is going to happen. To help business owners stay prepared for what might come, most banks offer business owners the option to open a line of credit that can be used for emergencies or other expenses, such as new equipment.
Having the option to open a line of credit is favorable to you as a business owner, so you do not have to use your personal finances for emergencies and other expenses.
Earn Rewards and Interest Rates
Everyone likes the sound of rewards. Opening a bank account for your business has its perks. You can earn travel discounts and rewards or cashback for certain purchases made with a business credit card.
Another benefit to having a bank account for your business is an interest-bearing account. Interest-bearing means you get money back for the money you keep in your deposit for your business.
Banks offer different interest rates, so you want to make sure you choose a bank that caters to your business.
What to consider before opening a bank account
There are some important factors to consider before opening a business bank account. First, you want to have an understanding of your needs and the needs of your business. Opening a bank account for your business is no small task, so make sure you educate yourself on a bank’s policies for business accounts.
Minimum Deposit to Open a Bank Account
Before opening a bank account, determine if the bank you choose has a minimum deposit requirement to open an account with them. Knowing the minimum deposit requirement helps you be more prepared when you are ready to take the step of opening a bank account for your business.
Minimum Balance to Avoid Bank Account Fees
The next thing you want to note is whether or not a bank requires a minimum balance in your account. You do not want the bank charging you a fee — such as monthly maintenance fee — that you were not expecting to pay. Banks will have different policies, and policies can differ between bank accounts, like a checking account and a savings account.
Third, consider and compare each bank’s monthly fees to choose one that best fits your budget for the business and your business’s needs. Monthly fees can include transaction fees and monthly minimum fees.
Banks often offer alert…
Read More: How to open a bank account for your business