Roughly 20 percent of small business owners use the same bank account for personal and business finances.
If you’re one of these people,
you’re doing your business a big disservice. Having a company bank account
helps your business look more professional and makes it easier to track and
manage business finances. If you’ve taken the step to open a bank account for
your business, it’s essential that you learn how to use it properly; otherwise,
you may not reap the benefits.
To help you make the most of your
business bank account, we’re sharing a couple of do's and don’ts. Read on!
Do
Find a Bank That’s Ideal for Your Business
It’s easy to walk into any
commercial bank or log on to their website and open a business bank account. In
most cases, you’ll only need to provide business registration documents as well
as your personal ID.
However, commercial banks aren’t
created equal. They’ll all offer you business banking services, yes, but what
you need is a bank that offers services suited to your business. As a small
business, for example, you need to open an account with a bank that has a
reputation for supporting small businesses like yours.
A bank that understands how small
enterprises operate and the challenges they go through is more likely to, for
instance, have a higher approval rate for small businesses loans.
Some banks also offer accounts to
specific types of businesses. For example, if you’re opening a bank account for your LLC, find a bank that caters to LLCs.
Don’t
Mix Company and Personal Finances
You might think that opening a
dedicated account for your business is enough to ensure you don’t mix company
and personal finances, but that might not be the case. Even with a company bank
account, some business owners don’t have the discipline to keep the finances
separate.
You have to be intentional about
this. Your personal money belongs to you, not your business. If you need to pay
yourself, transfer the salary into your personal account. Don’t leave it in
your company account just because you can access it whenever you want.
Do
Establish Long-Term Business Banking Relationships
You’re at liberty to open as many
business bank accounts as you wish, but that won’t be a smart move. It would
mean hopping from bank to bank.
Yet, without long-term business
banking relationships, it can be difficult to make the most of your company
bank account. If you need a working capital loan, for example, your bank will
scrutinize your banking and borrowing history. If you recently opened the
account or rarely use it to transact, the bank will likely deny you the
loan.
Don’t
Violate Terms of Service
Every business bank account comes
with terms and conditions the account holder must observe. However, the truth
is most business owners don’t read the fine print and end up unknowingly
violating the terms of service.
A bank can levy charges or fines on
your bank account if you violate the TOS. It can even suspend or close the
account, possibly affecting your operations. Imagine customers being unable to
make payments into your account because it’s suspended.
Observe
These Company Bank Account Do's and Don’ts
A company bank account is a vital
financial tool for your business. However, it’s a tool that calls for great
responsibility. Observing these do's and don’ts will help you make the most of
your account.
There’s a lot to learn about business finances, so stay tuned to our blog!
