Building a business includes more than just picking a location, developing a business plan, building a website or picking your social media platform. Some of you may be asking what could be more important. Well, I'm here to tell you that opening a business bank account should be on your top 5 of "things to do" list. Having a business checking account can help you deal with tax, legal and practical issues. Many business owners choose to manage their business and personal finances within the same bank account for the purpose of convenience and but fail to realize the advantages that come with managing a separate business account.
A major reason that companies use bank accounts is for internal control. Here are a couple of the control advantages of using bank accounts:
Keep in mind, the Internal Revenue Service (IRS) is really picky about business owners being able to show that their business is really a business and not a hobby. Basically, you have to show a profit on Federal Tax Form Schedule C three years out of every five. Having a separate business bank account established further proves you are a business and not a hobby business.
As your business grows, it becomes critical to build a proper legal and financial foundation. Opening a separate bank account is one small step in that direction, and will help keep your accounting records organized.
My mission is to offer the best accounting and operations solutions and tips for entrepreneurs and small to mid-size companies worldwide seeking to close their process gaps with actual solutions.