Business Checking Account - Top Reasons to Get One
A lot of times, sole proprietors use their personal accounts for business accounting purposes. However, that is not a very wise thing to do. Having a business checking account for various business transactions makes small business accounting much simpler. Besides, a separate account is also needed when the business is operated as a separate legal entity from the owner.
In this article, we will find the many reasons why you must get a USA bank business checking account for your entrepreneurial venture. Let’s begin.
Business Checking Account vs. Personal Checking Account
If you take an overview, such an account may seem a lot like a personal bank account. Both these accounts enable the users to make deposits and cash withdrawals, draft cheques, make payments, and much more.
That said, the primary difference between the two lies in terms of cost. Almost all personal checking accounts by different US banks are either completely free or come with easily avoidable fees. On the other hand, business checking accounts always come with associated costs. It is nearly impossible to find a bank that offers business accounts at zero cost. But many banks waive their fee if you open a US bank account with direct deposits and maintain a minimum daily balance.
Top Reasons for Getting a Business Checking Account
Owing to the severe paperwork and hard-to-waive fees associated with a business checking account, a lot of people try to avoid getting it. But there are many reasons that can persuade you to go for this instead of a personal checking account. Let us look at the most noteworthy ones.
1. Ease of Paying Taxes
One cumbersome task that every business owner needs to deal with is filing business taxes. The process involves filling out and organizing tons of paperwork that is extremely time-consuming.
To pay taxes, you need to determine your business income and expenses. With a business checking account, this is a relatively simple task as the account only involves business transactions. However, if you use your personal account for this, it will mean sorting through thousands of transactions to identify the ones associated with the business.
Thus, it is advisable to keep your personal and business accounts and transactions separate to make it easier to file taxes.
2. Reducing Your Personal Liability for Your Business
Another significant reason for opening a USA bank business checking account is liability. Such accounts separate their personal and business transactions. This helps to protect you from personal liability in case anything goes wrong in your business.
For instance, if you have a Limited Liability Company, and someone sues your enterprise, he can take away money from your business. Now if you don’t have a business account and only a personal checking account, you may lose liability protection offered by the LLC structure and be personally liable for all business debts.
3. Helps You Easily Qualify for Business Loans
With a business checking account, it gets easier to qualify for both business and personal loans. Many times, business owners require a loan to grow their business or diversify operations. While sanctioning loans, lenders pay a close look at your finances. And having your business and personal finances intermingled can make the process much more complicated.
4. Demonstrates Professionalism and Reliability
Many small businesses start as a side hobby. For instance, if you are selling your handmade products on Amazon, you may very well benefit from having a personal account. However, for a more professional outlook, you must open a business bank account in USA.
Having a business account adds credibility and professionalism to your small business. Your clients attach more value to your business and see it as a legitimate establishment. The bank account bears your name and all payments and transactions are undertaken through it. This gives out a much more professional look and makes you appear like a responsible entity.
Personal checking accounts are great for managing your everyday finances. However, if you really want to do business and set up a credible company, you must open a business checking account. This will help you keep a track of all your business transactions and simplify accounting to a great extent.