Arguably, the most important thing you can do in order to promote financial health is to keep your business and personal finances separate by creating a small business bank account.
It can be tempting to use your personal bank account for your business expenses or vice versa, but this can prove to be a costly mistake. Mixing money between your business and personal accounts can result in confusion and tax troubles and may even limit your ability to secure a business loan.
Clear Financial Separation
In order to encourage a clearer distinction between your personal and business finances, it is crucial that you have a small business bank account, as using one can offer a wealth (pun intended) of short and long-term benefits.
Once you have a small business bank account in place, it’s easier to separate your personal and business transactions for the purpose of tracking your revenues and expenses, as well as any investments. Using an account exclusively for your business eliminates the risk of recording personal transactions alongside professional transactions.
Tax Benefits and Simplicity
Moreover, a separate account can help you save time when doing a number of everyday costs. Whether you’re tracking your expenditures for the month for budgeting purposes, filing a small business loan application, or completing your taxes every spring, having a specific small business bank account for your business endeavors expedites the process, and it is much less intimidating.
Finally, having a small business bank account often makes the process of filing your taxes much less of a headache. Many small business owners report difficulty when it comes time to accurately report expenses related to running their business.
For instance, a company like Bluevine connects you to seamless banking at your fingertips that is specifically designated for small business use so that you’re able to easily track and individually categorize your expenses. This way, you’ll be able to avoid costly errors and feel confident that you’re not missing out on a single tax deduction.
Professionalism and Trust
It’s not just convenient to have a small business account, it can also allow you to instill trust in your clients and vendors. Even if you operate as a sole proprietor, having a small business account says that you are a serious, professional individual and that clients and vendors alike can trust you.
Easier Access to Financing
If you are looking to apply for a loan or credit to help take your business to the next level, a small business bank account can greatly increase your chances of being approved. Most lenders prefer to see that you manage your money properly and are running a legitimate business.
Having a business bank account gives you clean, professional, and accurate statements that will show lenders that you have the cash flow to handle your expenses and run a profitable business.
A Smart Step for Your Business
You get clarity, professionalism, and financial confidence with a small business bank account. Whether you are keeping up with your taxes, building trust with clients, or simplifying your day-to-day activities, opening a separate small business account can be beneficial for your business. The investment in a small business account ensures that your business is efficient, effective, and set up for success.
