4 Great Benefits of Opening a Business Account for Your New Company
Money-management is one of the most important aspects of owning a company. Entrepreneurs who are new to business tend to receive plenty of training on how to manufacture or sell goods/services, but the minimal focus is placed on how to physically process cash in a business. In order for a company to make good use of its overall income, it needs a secure and sophisticated banking framework. This is because bad banking can cause companies to lose money through redundant transactions and excess costs. If you’re planning on going into business for yourself, don’t make the rookie mistake of using personal bank accounts to process cash from your business.
Make it Formal
As soon as you start accepting or spending money through a business venture, you should open a business bank account. Common types of business accounts include checking accounts, savings accounts, credit card accounts, and merchant services accounts. Merchant services accounts are especially important because they make it possible to accept credit and debit card transactions from customers. The configuration of your banking framework ultimately depends on how elaborate your business is, and which bank you choose to work with.
Here are a few advantages that come with setting up a designated business bank account:
- Protection – Business banking offers limited personal liability protection by keeping your business funds separate from your personal funds. Merchant services also offer purchase protection for your customers and ensure that their personal information is secure.
- Professionalism – Customers will be able to pay you with credit cards and make checks out to your business instead of directly to you. This instills a sense of trust in your clients. Moreover, you’ll also be able to authorize employees to handle day-to-day banking tasks on behalf of the business.
- Flexibility – Business banking usually comes with the option of a line of credit for the company. This can be used in the event of an emergency, or if your business needs new equipment. Having access to credit can be a lifesaver because it allows you to borrow money without asking for time-consuming loans.
- Versatility – Business accounts can have multiple signatories. In other words, you can allow other people (such as managers or employees) to access your business account for official reasons. This is convenient because while you concentrate on running the company, a separate employee can concentrate on handling administrative banking duties.
Business bank accounts are more suitable for conducting business because they comprise features that are designed to help companies transact with ease. For example, business bank accounts have better interest rates than personal ones, they have higher lines of credit, and they’re designed to facilitate high volumes of transactions. The sooner you designate bank accounts for your company while it’s still new, the less you’ll end up comingling company revenue with your own personal funds. Do the right thing from the start and everything will fall into place as time goes by.