Why Your Business Needs A Separate Bank Account
When starting a business, you may want to consider setting up a separate business bank account rather than trying to conduct business from your personal account. While some people continue to use their personal account, this can cause all kinds of problems. Below are just some of the reasons why a separate bank account for your business can be beneficial, including the ability to grow your business via a business loan. For a business loan it is important to have a professional separate business bank account to showcase what your business can do and more. Keep reading to learn the many reasons a separate bank account for your business is much needed…..
Avoid personal account penalties
There are no laws against using a personal account for business purposes and people question is it legal to move money from a business account to a personal one. However, many banks will have terms and conditions that prohibit you from using personal accounts for business use – and may even charge penalties such as fines. It’s unlikely you’ll get caught out for using a personal account for business, however there’s always a risk.
Make bookkeeping easier
Creating a separate business account with wholesale lending banks, allows you to separate your business funds and personal funds. In doing so, you can clearly determine which forms of income are taxable and which expenses are tax-deductible. This can prevent bookkeeping errors when filing tax returns and it can also make your business finances more organized so that you can more easily work with accountants and financial advisors.
Legally separate your business funds
If you want to set up your company as a limited company, you’ll need to set up a separate business account. This allows you to legally separate your business funds and personal funds. If you have personal debts, this means that any business funds cannot be used to pay off these debts, and vice versa. This is useful in the event that you ever fall into arrears or have to claim bankruptcy. You might find it beneficial to utilize the services of a limited company accountant, for example, so you can keep everything in order and up to date.
Build up a business credit score
Having a separate business bank account allows you to build up a separate credit score for your business. This is separate from your personal credit score. By building a good business credit score, you can enjoy greater access to finance options, regardless of whether your personal credit score is poor or not. This could be useful when growing your business.
Handle different currencies
Some business bank accounts also allow you to hold different currencies. If you want to take on customers from other countries, this could be useful, as it could allow you to charge them in their own currency. You can then transfer this foreign currency to your own currency at your leisure. There’s also the option of a crypto bank account, which can allow you to trade using cryptocurrency. This could be useful if you’re dealing with customers or suppliers that use crypto, giving them an extra payment option.
Access business loans and business credit cards
A business account gives you the option to access various business loans and business credit cards that you may not otherwise be entitled to. Some of these could have better interest rates or rewards than personal loans and personal credit cards. It’s worth shopping around and comparing business lending options offered by banks when choosing the right business account.
