Starting a business can be complex, but the internet has made it easier than ever before. You can quickly send cash to a virtual assistant in Columbia, create ads that promote your business to people all over the world on Facebook, and mail goods that show up on your customers’ doorsteps in just days, no matter where they are being delivered.
However, one thing remains a challenge—finances.
Although it may seem easier to use your personal bank account for business purposes, especially when you’re first getting started, it’s actually much better to open a separate account just for your business.
It Protects Your Personal Identity
One of the most convincing reasons to have a separate bank account just for your business is that it can protect your identity and your personal life.
By applying for an employer ID number, you can separate your personal life from your professional one so Uncle Sam can’t come after your personal finances. However, if you use the same account, they may have a claim on your personal assets whether you have an ID number or not.
Separate your accounts so it is very clear which money and assets are associated with your business and which ones are personal. That way, if there’s trouble in your professional life, it doesn’t spill over into your personal life.
You Can Typically Run More Transactions on a Business Account
Different accounts have different capabilities. Personal accounts, in many ways, offer bare-bones services. After all, most people don’t deposit or withdraw cash anymore than a few times a month.
A business account will allow you to run more transactions. This is especially important if you want to start accepting credit card payments.
It Makes You Look More Professional
A lot goes into making your business look more professional, especially if you’re just getting started. It includes:
- Designing a website
- Having an email address that is associated with that website
- Getting a business phone number
- Sending professional invoices
- Using a separate address for your business
It also includes creating a bank account just for your business. Not only does it make you appear more professional to customers and investors, it also helps you build credit for your business so you can use more resources at your bank.
Accounting and Budgeting Are Easier
When you first get started, it’s probably easy to figure out which deposits and payments are personal and which are professional. However, as you grow and expand, it will become a huge challenge to tease apart your finances.
Save yourself the trouble and get a professional account for your business. Not only will it help you with accounting now, it will help you come tax time later. Your tax professional will appreciate not having to go through every transaction when it’s time to pay Uncle Sam!
Getting your money in order when you have a business is important, no matter what its size. From figuring out how to pay employees to getting paid yourself, it will definitely pay off in the long run if you have a dedicated bank account just for your business.