If you are considering starting a business or already have one, you may wonder whether you need a separate bank account. While it may seem easier to use your personal accounts for everything, this can cause you more problems in the long run. We’ll help you understand why you should have a business account and how you can get started with opening one.
1. Tax Compliance
With a separate business bank account, it’s easier to file your taxes and report your income and expenses to the IRS. You can also deduct your business expenses from your taxable income, which can lower your tax bill. If you mix your personal and business finances, you may have a hard time separating them and proving your deductions. You could also face penalties or audits from the IRS if you don't report your income correctly.
2. Legal Requirements
Depending on your business structure and income, you may be legally required to have a business bank account. For example, if you form a corporation or a limited liability company (LLC), you must have a separate bank account for your business. If you are a sole proprietor or a freelancer, you may not need a business bank account, but you may have to get one if you earn more than a certain amount of money per year. Check with your state and local laws to see what applies to you.
3. Professionalism
Having a business account can show that you are serious about your business and ready for growth. You can accept payments and issue invoices with your business name, boosting your credibility and making it easier for your customers to make purchases. You can also access business banking services, as well as loans, credit cards, and merchant services, needed to help you grow your business.
4. Liability Protection
By keeping your finances separate, you can protect your personal assets from your business liabilities. If you have a corporation or an LLC, you can enjoy limited liability, which means that your personal assets are not at risk if your business faces a lawsuit. If you mix your personal and business finances, you may lose this protection and expose your assets to creditors and legal claims.
5. Financial Management
You can easily manage your finances and better plan for the future. You’ll be able to see how much money you are making and spending, plus you can create a budget and a cash flow forecast. This can help you monitor your financial performance and identify areas where you can improve or save money. Once you’re looking to expand your business, you can use your business account statements as proof of income when you apply for loans or grants.
How do you open a business checking account?
Opening a business account is easy! But you’ll need to do some research and preparation before you choose a bank and a type of account.
Establish Your Business
Before you open your account, make sure that you’ve chosen a legal structure for your business, registered your business name, and have a plan to organize your finances.
If you’re not sure where to start, see how you can do this in 10 easy steps with “A Beginner's Guide to Starting a Small Business in Florida”. This will help you launch your business and prepare everything you need to open a business account.
Gather Your Documents
To open a business checking account, you’ll need to have documents stating your business name, EIN (Employer Identification Number), business address, business license, articles of incorporation or organization, partnership agreement, and your ID, along with your Social Security Number. You may need additional documentation based on your business type. The exact requirements may vary depending on the bank and the type of account you want, so double-check with your financial institution before you open an account.
Compare Accounts
When choosing an account, consider factors such as fees, minimum balances, transaction limits, online banking options, and customer service. You can easily view our business accounts, including options with no monthly fee or minimum balance requirements, conveniently in one place with our business checking comparison chart. You can also schedule an appointment with one of our Business Relationship Managers to discuss your options.
Open Your Account
To open your account, you will need to fill out an application form online or schedule an appointment at a branch and provide your documents. You will also need to make an initial deposit. You will then receive your account number, debit card, online banking access, and everything you need to manage your money easily!
A business checking account is a smart way to manage your finances and grow your business. Whether you are a freelancer, have a small business, or are already established, you can find a business checking account that suits your needs and goals. There’s no better time to open an account to protect yourself and your business!