Regardless of the type of business you look to operate, it will be a requirement to open a bank account to separate your business income from personal and other revenue sources. A bank account under the business name will provide its transactions with a certain legitimacy. However, business bank accounts offer different features, which will depend upon the way your business is legally formed.
Why do businesses require a business bank account?
Otherwise known as a corporate account, a bank account can instantly ease the daily hassle of your business finances. Many banks have a specialist advisor that will assist you through the complex processes of financial transactions, which is even more beneficial to newer businesses.
Services and charges vary depending on the financial institution, so picking the right business bank account is crucial for your company.
The advantages of having a business banking account
If you’re a fairly new business owner or have been using your account for a while, you might be hesitant to move to a corporate account. However, sooner or later, you might be forced to do it as personal accounts are very limiting, especially for growing business – and you’ll be missing a lot of important perks as well.
Moreover, with various tax matters to consider between personal and business finance, keeping your money separate will reduce the headache when it comes to filing your returns.
Further benefits of opening a business bank account:
Improved professionalism. Using a business account for transactions with other companies will show that you’re operating a serious, legitimate business. This will attract new and retain customers.
Showing you’re ready for the big leagues. Because only true businesses can deduct business expenses, proving that you’re not just making money from the side as a hobby is important. Getting a corporate account sets you up as a contender and improves your overall business outlook. All huge businesses came to the point of opening a corporate account on their way to an eventual big break.
Clear and precise bookkeeping. Having a separate business account will make a huge difference to your calculations for filing your tax returns. For instance, it’ll be easier for you and your accountant to claim back everything you’re entitled to.
Plus, it makes auditing more straightforward.
Setting up your business banking. The starting step in setting your new business is to register a corporate account. All banks will ask a business to provide documentation when opening up a business account. Therefore, you will need to gather some information (aka, paperwork to prove you’re a legitimate business).
Here are some of the basic information that a bank might ask:
- Social Security number (SSN)
- Employer Identification Number (EIN)
- Business license
- Legal business name
- DBA name
- Organizing documents (e.g., articles of organization)
Based on your bank’s requirements, you’ll need to provide different pieces of information to establish your business bank account. As you research for banking options, ensure that you know what requirements will be asked and if you’re capable of providing them in the first place.
There you have it! We hope you’re convinced to open a corporate account to get your business to the next level.
