As a small business owner, you probably started off running your business from a personal account. But now that your business is growing, it’s time to switch to a business bank account. But why should you make the switch? In practice, separating your personal and business accounts will help grow your business’ brand, credit rating, and customer base.
This article will show you how to switch from a personal to a business bank account to help run your business more smoothly.
Check What Account Is Best for Your Business
Check out what accounts are available and decide on the best option for your business. For example, you might want to start with a business checking account to help you pay bills and collect payments. But if your business income has started to grow, opening a business savings account to go with your business checking account might be a viable idea.
Select a Bank
Some banks deal with specific types of businesses and industries. With that in mind, you stand to benefit greatly if your business falls under the category of businesses a prospective bank offers. Also, check different bank rates, account fees, and whether they offer loans to small businesses.
Fortunately, you don’t have to open your business account with the same bank you use for your personal account. Other banks might be offering better rates or benefits, so shop around to find yourself a bank that can best meet your business needs.
Choose and Open a New Business Bank Account
The application process may vary for different banks. Check whether your potential bank offers an online application, or if you must visit their offices for a physical application. Be sure to have your business papers and financial documents ready. Also, once you set up your account, ensure that online access, ATM access, or money transfer are working properly.
Update Your Automatic Payments & Deposits
Take note of any automatic payment options you have set up for business related expenses and transfer them to your new account. Then notify your customers and suppliers about the changes. This will help keep supplies and cash flowing into your business. You’ll also want to direct all your business-related revenue into the new account. It’s easy if you’re mainly depositing cash, but if you accept credit card payments, you’ll have to update the deposit account with your credit card processor.
Getting a Business Credit Card
Ready with a business bank account? Well, now you need to separate your business expenses from your personal expenses. And what is a better way to do this than getting a business credit card? Other than keeping your expenses in check, this card will also help build your business credit score. A good credit score is the ultimate way to secure business financing and reduce business insurance.
Will It Cost You More?
Operating two accounts may seem costly. However, this should not worry you, as most banks offer small-business friendly business checking accounts with no or low fees.
Operating your businesses using a personal bank account comes with tax complexities and bookkeeping confusion. Run your business more smoothly and efficiently by opening a business bank account today.