In an ideal world, every company would open a business account before engaging in their first business transaction. However, according to a TD Bank poll, 27% of small business owners utilize the same checking account for both their personal and professional transactions. While the size of your business shouldn’t be the primary factor in deciding whether to open a business account, it is important to keep your personal bank account distinct from the payables and receivables of your firm. This will help you better track and manage your finances and avoid any potential legal complications.
Opening a business bank account is an important step in the process of starting a business. It can help you keep track of your finances and ensure that your money is used in the most effective way possible. Additionally, having a company bank account can give you access to certain financial services that can be helpful for your business. For example, you may be able to get a business credit card or apply for a loan.
As already mentioned, many small business owners still use their personal accounts for business transactions, which is not a great idea. There are several reasons why you should not use conduct business through your personal account, and we’ll take a look at them.
It Causes Headaches to Bookkeepers
Dealing with accounting and bookkeeping is a necessary part of running a business. There is no getting past the fact that it is undoubtedly boring. Simply said, your bookkeeping and accounting will be the foundation for determining if your company must pay taxes, and all authorities want to obtain this information.
As a result, if you want to keep your relationship with the tax authorities positive, start by keeping your books of accounts in good shape. In light of this, setting up a business account instead of using your personal account will allow you to save some time that you could be using to concentrate on your company.
It Can Be Confusing
The quantity and number of your business expenses will increase as your business expands. Your bank might eventually become aware that you are using your personal account for business spending. If that happens, your bank will probably ask you to use your personal account only for personal spending.
Simply put, your bank may not allow you to use your personal account for business purposes because the costs for personal and business accounts are different: typically greater for a business account. If you’re using your personal bank account for business costs, you might want to review the terms and conditions to see what can happen.
Chances Of Losing Clients Will Be Higher
Some clients could decline to deposit money into your personal account, particularly if they’re big businesses. These customers will insist on paying into a bank account created in your company’s name as compliance regulations become more stringent every year.
If you consider yourself in their position, this condition makes perfect sense. Clients want the name of the business providing the invoice to match the name of the bank account to which they are sending the payment. You should not wait till you run into this problem if you don’t want to lose out on potential customers.
Open A Checking Account With Zil
The most effective approach to managing your business is to open a checking account with Zil. Your Zil account comes with no monthly fees or minimum deposit amounts and no maintenance charges. We have no hidden charges, and it takes only minutes to open a checking account. You can also enjoy ACH and Wire transfers from anywhere, anytime, at a lower cost compared to other banks with hidden charges.
Setting up a business account allows you to keep your transactions separate from your personal finances. This will help you stay on top of your expenses and make it easier to track your earnings. Having a professional-looking business account is also sure to impress potential clients and partners. So why not set one up today with Zil?