There are plenty of ways to make your life easier as a business owner, but one of the first pieces of advice you’re likely to get concerns opening up a business bank account.*
Even though the success of your business endeavor is directly linked to your personal finances, it’s always a good idea to try and keep the two separate. Here’s why:
Separate the personal from your business
An organized business is a successful one, and having a dedicated business bank account makes it easier to organize your affairs quickly and efficiently. You should be able to easily track what money is coming in and going out, as well as ensure the numbers in your bank account match those in your own records. This can be much more difficult if your personal account and business account are one and the same.
Also, keep in mind how much easier it will be to obtain the relevant information you need come tax time each year. Any step that makes dealing with the IRS simpler is bound to be a good one.
“Appearances matter in the business world.”
Keeping on top of cash flow
Having solid cash flow is a must for any business, and a separate business bank account will make determining how your operation is performing that much easier. You should be able to easily see how profitable your business has been, as well as be able to calculate income and expenses.
Being able to access this information quickly and easily will let you know whether your business is on the right track or whether things need to change. A separate business account can also be ideal for tracking when you may need a loan.
Putting your best foot forward
Appearances matter in the business world. Whether you’re operating out of a storefront or working from home, setting up a business bank account can help your operation appear more legitimate. When you’re paying vendors with personal checks or unable to accept credit cards because you lack a business account, it doesn’t do you any favors in the eyes of customers and colleagues.
Limiting legal liability
Liability issues are a very real concern whether you own a business or not. However, if your personal and business finances are co-mingled, you run the risk of leaving yourself personally liable. This means your personal finances could be in danger of taking a major hit should a liability issue arise.
“A business bank account gives you a leg up when dealing with the IRS.”
Making the tax man happy
Since having a business bank account makes recordkeeping easier, it automatically gives you a leg up when dealing with the IRS. However, the benefits go well beyond organization.
If your business should face an audit, the IRS will try to determine whether it’s a legitimate enterprise or a hobby. Having separate bank accounts will add to the legitimacy of your business and help ensure you can benefit from the special business deductions you’re entitled to.
Obtaining a business loan
At LoanMe, we want to help our clients succeed. That’s why we require you have a business bank account in order to get a loan. This way you can give your business organization a boost, better track cash flow, appear more professional to the right people and protect yourself legally.
If you run a for-profit business that has been operating for at least two months, have a bank account in the name of your business and a personal credit score of 500 or above, you may be eligible for a fixed-rate loan with a low monthly payment that can be wired into your account in as soon as 24 hours.
*This article has been prepared for general information purposes only. The information presented is not legal, financial, tax or accounting advice, is not to be acted on as such, and is subject to change without notice. Credit approval is subject to LoanMe’s credit standards, and actual terms (including actual loan amount) may vary by applicant. LoanMe requires certain supporting documentation with each new application. If you have any questions regarding this, call us at 844-311–2274. California loans are made pursuant to LoanMe’s California Department of Business Oversight Finance Lenders Law License #603K061. LoanMe also offers loans in certain other states which may have higher minimum loan amounts. Copyright © 2015 LoanMe, Inc. All rights reserved.