A dedicated business bank account is one of the first steps that every entrepreneur must take. This is not a requirement by law, but it is the right thing. This article will give you the top seven reasons.
What is a business bank account?
This is a bank account that’s dedicated to your company. You can use it just like a personal bank account. You can deposit, withdraw, and make payments. Many financial institutions offer accounts with special features for business, such as higher interest rates on savings.
There are seven main reasons why you should use a corporate account:
Professionalism
Your business will appear more professional in the eyes of customers and other businesses. It looks more professional to use an account in your corporate name when you receive payments. It looks more professional when employees and vendors receive payments through an account registered under your corporate name.
Professionalism is not a good idea to use a personal account for business. Customers and vendors might think you are not serious and that you don’t intend to stay in business.
Easier Tax Preparation
You can monitor transactions with corporate accounts. It is easy to keep track of all cash flows and report them to the tax authorities. You can also easily track the corporate expenses you can deduct against your tax liability.
Even your bank account could be integrated with your software for tax preparation. This integration allows you to create automatic tax reports, saving you time.
Limited Liability
Limited liability is a legal situation in which the business owners are not personally liable for any corporate debts or judgments. Virtually every country allows people to register limited-liability firms. One of the requirements is that you have a separate account for your business. So, the corporate expenses are separated from personal expenses of owners, making it easier to identify who controls what asset in case bankruptcy or court judgements.
Credit Services
Before granting a loan, most banks require a corporate account. You’ll also need a corporate account if you want to request a loan at your financial institution. By repaying your loans on time you can establish a good credit relationship with your financial institution. You will also have easy access to credit due to your reputation.
Corporate accounts also make it easier for you to apply for grants, subsidies or other types of financial support from the government. A personal account will not help you get a grant from the government because they’ll assume that your company isn’t legitimate.
Complementary Features
To attract business owners, financial institutions often offer complimentary services. Signing up for a new account can give you access to free invoicing and billing tools. Signing up could also result in a free subscription to tax preparation software.
Lower Fees
Most financial institutions offer reduced transaction fees to corporate accounts. Some financial institutions will even waive the transfer fee if you exceed a certain volume of transactions per month. These lower fees will save you a lot of money in the long term.
Automated Bookkeeping
The process of maintaining accurate financial records is called bookkeeping. Corporate accounts allow you to log and categorize financial transactions automatically, saving you time and effort.
Conclusion:
The main advantages of corporate accounts have been explained. It is simple and easy to open one. Open a business bank account in person or online to start doing professional transactions.
