Having been responsible enough to create a legal entity by legally registering your business, you need to decide where to lodge the proceeds of your business .
Opening a separate bank account for businesses is a requirement for every business , be it Limited Liability Company, Partnership and Corporations and highly recommended for Sole proprietors for smooth running of business .
Let us assume that before now you use a Personal checking account for your business transactions, you may want to open a separate bank account for your business. There are many benefits for a business to its own checking account, so, as you intend to grow your business, keep these benefits in mind.
Your Business Records are Organized
A business checking account organizes your business records more effectively by separating your personal transactions from your business transactions. All your business transactions are tracked on a separate statement so as to maintain accurate track records and monitor your business’s profitability.
Therefore, it is recommended that separate Personal Checking Account from Business Checking Account, mixing personal and business transactions into one account might pose a hard time trying to determine profit margin. To find your profitability, you must identify which expenses are personal and separate from business expenses.
Accepting Credit Cards Transactions
Accepting credit cards helps you serve a larger number of customers because you limit your customer pool and potential sales when you only accept cash payments. Besides, most customer may not want carry cash along with them.
With your business checking account, you can set up a credit acceptance system through the bank. Or, you could set up a merchant account with your business checking account.
Although you benefit from not running a cash-only business, you may have to pay the bank extra to accept card payments. It is important to effectively check card maintenance and transaction charges/fees before signing up for credit processing services.
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Establish Business Relationships with your Bank
It is even more professional to pay vendors with checks(cheques) that have your business information printed on them. Also giving instruction to customers, to issue payments in favor of your business name.
Opening a business checking account can also help you establish a long term business relationship with your bank. Relationships with your banking can help you grow your business. For example, if you need to finance your business with a small business loan, good relationship with your bank representative, in addition to good credit rating, might help you get better loan terms.
Multiple Business Account Signatories
Multiple signatories is an important feature of business checking account. You can have multiple signatories on a business checking account. In other words, you can allow other people to use your business checking account.
While you run your business, an employee can do some administrative banking duties. This could allow you to focus more time on revenue-generating aspects of your business, however, you should be mindful of who you give access to your business account, especially if you are a sole proprietor.
Ensures Accurate Taxes and Deductions
Operating a business checking account for business financial transactions does not just help you organize financial records but also helps you file taxes which requires that your business transactions be separated from your personal transactions.
A business checking account helps to ensure that taxes are filed timely and accurately, by assessing business account statements and record the figures on your tax return. On the contrary, filling accurate taxes becomes harder or difficult when personal expenses are mixed up with business expenses, which could attract penalties to your business from the Tax Authority.
You can also deduct business allowable expenses from your tax return which can only be easier if you use a business checking account. You must prove all allowable expenses for tax purposes.
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Do You Need Accounting Help?
Consistent up to date and cleaning of accounting records for sound business decision making, may be posing some difficulties when you are preoccupied with other business functions. Is it time to consider independent professionals because of certain technical complications that could occur along the line? It could also be daunting, time-consuming procedures. Not recording correctly and poor monitoring can cause complications and confusion.
At Fritznoble , we assist our clients on the best available options that suit their businesses...Reach out/ Outsource With Us… If Accounting works are bothering you, then it’s time you outsourced your accounting and bookkeeping requirements, this will help you concentrate more on core competencies of your business; with a team of professionals to help.
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