Should I Open a Business Bank Account?

Should I Open a Business Bank Account?

If you are starting your own small business, you may wonder if opening a business bank account is really necessary, especially if you run a one-person business from home.

The fact is that the benefits of having a business bank account that is separate from your personal banking far outweighs the hassle of setting up the account. In fact, setting up a business bank account is virtually as simple as setting up a personal account.

Business banking does not need to be expensive either. In fact, you probably can set up a free business bank account with more than one bank in your local area. Most banks offer business banking services, you don't have to find a commercial bank with which to open an account.

If you are a small business, you probably don't need most of business banking services that cost extra money. A basic account will let you deposit funds, write checks and pay bills online, and many times you can get this for free or very little cost per month.

So why does it matter whether or not you keep your business and personal finances separate? It makes it extremely easy to track business expenses and income, especially at tax time. Having a separate credit card exclusively for business is important for this same reason, but that's an entirely other matter.

Another benefit to having a company account, specifically a business checking account, is that you can accept payments made to you by customers to your business name. You can also write checks to vendors or suppliers on checks displaying your company name. This instantly professionalizes your business and earns you respect from people you do business with.

Lastly, having a business bank account helps you establish a relationship with a potential lender. If the time comes when you need a loan or some sort of business financing, it doesn't hurt to have this relationship, as you already have your foot in the door.