Banks and other financial institutions develop ways to help you handle your finances. They often do this by creating a business bank account in which you can safely store your money. You can utilize these accounts as an individual, business, or group. The choice depends on your needs.
This article focuses its attention on business accounts. As the name suggests, they’re in place for businesses. However, even though they exist, some business owners shy away from setting one for their businesses for different reasons. However, this article chooses to shed light on why you need to open a business bank account for your US-based company. Read on for this insight!
You need a business bank account to:
Many banks operate differently, but most have offers depending on the type of account you open. Most business accounts come with offers that an individual account holder can’t enjoy. To encourage the public to open business accounts, some banks might exempt you from certain fees. Based on your type of business account, you may need to pay low transaction fees for your business transactions. With others, you won’t pay a dime. Such exemptions reduce your business expenses, availing more money to fund other operations, and increase your profit margins. Here, it’s advisable to compare business account benefits with others to see the one offering the best and most.
Other banks will allocate financial managers to your business account, who’ll advise you accordingly regarding your business finances. With such expertise, you’re less likely to make financial mistakes that could lead to losses.
Professionalism is a key concept that business owners should embrace and incorporate into their operations. This concept determines your public image and how your clients will feel as they seek your services. You want them to feel at home and safe as they work with your brands. Operating a business with no business account defeats this purpose. Why?
Imagine a situation where a client is making payments, and your name shows up as the recipient of your funds. It’s not an issue, but what image does it portray? Most customers will question this since they expect your company’s name to appear. Some clients might suspect conmanship and ask you who the name belongs to. This reduces the confidence clients have in your brand.
A business account, such as Airwallex, will remove all this doubt since they’ll know they’re transacting with your business. Also, clients will translate a business account to mean that you care enough and are serious about your business that you go the extra mile to open a business account. They’ll see you know what you’re doing, further trusting you with their needs.
Protect Your Personal Finances
As a business, you handle many transactions and work with different types of clients. You might find yourself in conflict with other parties, such that they can decide to sue you. Depending on the nature of the case and who’s wrong, you might be guilty of the offense a given client is levelling against you. The courts will ask you to compensate the other party as punishment. Shouldn’t you have enough finances to cater to the compensation, the judge might give the client permission to seize your business assets that are worth the compensation. Your business finances are part of your company’s assets. Therefore, the client can decide to get their compensation from there.
The problem arises if you use a joint account with your individual account. This means that both your personal and business finances are together. It’ll be challenging to differentiate the two, let alone convince the courts that a certain percentage is yours, with the rest belonging to the business. Should you fail to differentiate the two, you can lose everything, including your individual finances.
A business account will safeguard your personal finances, ensuring that only that which belongs to the business can be seized. However, this depends on your business structure. With some, your personal assets will also be susceptible to seizure. Business structures that mainly safeguard your individual assets are limited liability companies.
Track Your Finances
The finances of any business are essential. You need to be aware of everything, from the smallest to the largest amount you spend daily. Failure to, you might find yourself in a financial crisis where you spend more than you have, leading to possible bankruptcy. If you use your personal account for everything, you might find yourself in a situation where you don’t know your business’s cash flow. It’s challenging to know what belongs to the business and what doesn’t.
However, having a separate business account means all your transactions and finances are in one account. There’ll be no confusion. You’ll be able to plan for your company and make deals without making errors that could cost you.
The above discussion has given you compelling reasons why you must open a business account. With this information, you can weigh your options and decide if a business account is ideal for your transactions. However, the decision is yours to make; so, make the right one.