Why Should I Have a Separate Business Account?
Written by Desmond on November 28th, 2007
A member stopped by to see me today and asked a question that I hear a lot, “why should I have a separate account for my business.”
When you have a business, even a small home business, it should be separate your personal accounts for the following reasons:
- Record Keeping: especially during tax time. You will be able to see how profitable the business is. I let the member know that I have worked with businesses that were losing money and did not know it until they isolated the account. Your accountant or whoever is doing your year end and/or quarterly tax returns will also love you.
- Budgeting: once you can see the income and expenses of the business you can plan for major purchases and pay yourself a salary.
- Professionalism: your Business check card, credit card, and checks will have your business name printed on them just like the big companies—giving you additional marketing exposure at no additional cost. You can accept credit cards for payment of services with a merchant services solution thereby reducing the time it takes to receive payment.
- Higher limits: Business credit cards, lines of credit and check cards usually have higher limits for cash flow purposes.
- Growth: if your company grows over time, you may need to add employees. This will require you to issue payroll checks, keep records of those checks, etc. Financial institutions usually provide a solution for your payroll needs through a business account.
The member has set up an appointment with me to talk about the details of his specific situation. Ensure that you too are using your resources to make informed decisions about your current and future business needs.
