If you are a business owner, you know that there are a lot of people who depend on you. You may be making smart money moves and growing, but somethings don’t change regardless of your company’s size. Your employees always need to be paid regularly to continue serving your customers. Your customers also need to be able to easily pay for the goods and services that your company is providing. At the same time, vendors need to be consistently and efficiently paid to keep supplying what you need when you need it. However, some of these necessities can’t be effectively done using just a personal bank account. Find out why opening a business bank account can help improve your financial processes and, more importantly, protect you, your employees, and your customers.
How opening a business bank account protects you
When you open a business bank account, you are essentially drawing a line between your personal finances and your business finances, so that they are not comingled. This separation can help protect you as the business owner in several ways, including reducing the risk of fraud:
- First, it has the potential to shield your personal assets from any action that might be taken against your business. Having a separate business EIN helps provide you with some protection from personal liability or seizure of personal property.
- Second, if your business is ever audited, having a business bank account can help to simplify the review process.
- Finally, having a business bank account can help you easily track business expenses for financial planning, future projection, or risk management purposes. If you face a crisis that causes company operations to temporarily cease, like a hurricane or another pandemic, you have all of your revenue and expense information in one place so you can make important decisions quickly.
Opening a business bank account provides you several benefits
Beyond these primary protections, having separation means your total FDIC or NCUA protection goes further. That’s because their insurance protects business accounts and personal accounts separately. If you have only one account that you are using for personal and business, the total protection you have is $250,000. But if you have a business account which is protected up to $250,000 and a personal account that is protected up to $250,000 there are up to a total of $500,000 in assets under protection.
Also, this separation helps protect your privacy and security so you can decrease your chances at being a target for tax theft. You might have employees whose jobs require access to company accounts, which means that if your non-business transactions are comingled in one account with your business transactions, all of that activity is on display. Keeping them separate means your personal information will stay personal.
Lastly, there are bank and credit union products which are geared specifically to business banking accounts, including commercial real estate loans, business credit cards, commercial treasury products, and more. These tools give business owners certain protections and other benefits that help you expand where you need to and bridge the gap between retained earnings and projected revenues.
Opening a business bank account benefits your employees
Just as a business bank account can help to benefit you as the business owner, it can also help to benefit your employees. It helps streamline your employees’ experience as there are business solutions that enable you to help with cash flow and your day-to-day operations.
Opening a business bank account also benefits your customers
When you open a business bank account, you are helping solidify your company’s brand identity in the minds of your customers, and express stronger business legitimacy. Because now customers aren’t paying you, they are paying your business. This creates more buying confidence, which improves the likelihood that they will keep coming back for more. Also, using a business account gives you access to additional products to help potentially save your customers money.
How opening a business bank account helps your vendors
Besides benefiting employees and customers while protecting you as a business owner, opening a business bank account can also strengthen your relationship with vendors. When you have a business account, it’s easier for vendors to be paid quickly and efficiently, because now it doesn’t have to be just you, authorizing payments anymore. You can have your bookkeeper handle that, or your purchasing manager. Which means more time and availability for you to work on your business, rather than just working in your business. Best of all, your vendors get paid on time which may open the door for better payment or credit terms down the road.
Opening a business bank account is good for you, your employees, your customers, and your vendors. It helps you safeguard your company against a variety of potential risks, and there are really no downsides to opening a business bank account. Once you identify the options that best suit your company, you will be ready to open your account.
It’s very easy to get started with the proper documentation. Although there is a little bit of variance on what documents are needed based on your type of business, you will most likely need your state filing information, valid identification, a Federal tax ID, and a beneficial owner certification form. Contact us if you have any questions at 904.354.8537 and we’ll help get your business account started as soon as possible.