Establishing a business is daunting. That being said, it’s important to establish sound business practices from the get-go, such as those concerning your finances.
Managing your business’s finances properly from the start can help save you time and prevent issues as your company grows. One way to do that is to open a business bank account as soon as your business launches.
Here are five reasons why you should open a business bank account to help establish and grow your business:
1. It Makes Transaction Tracking Easier
Setting up a business account allows you to have a separate place to keep your company funds. Any sales revenue or client payments can go directly to your business account instead of your personal account. You can easily manage your daily business finances by isolating your company money from your personal funds.
When all your business income and spending are visible in the same account, it’s easier to track and monitor your daily business transactions. It’d also be hassle-free to keep track as to which clients already paid you, which payments have already been processed, or which monthly expenses went beyond or less than your objectives.
2. It Streamlines Tax Preparation
Having a business bank account can help streamline your business tax preparation. As mentioned before, separating your personal account from your business account can make it easier to manage your business’s expenses and income flow.
This, in turn, makes it easier to track your tax-deductible business expenses, saving money and time when filing your tax returns. You can easily round up your deductible expenses when all your business transactions are trackable and available in a single account.
In addition, you can use tax preparation software that links to your business bank account to automate your tax preparation. A separate business account, along with reliable tax preparation software, can save you or your accountant the headache and avoid any unpleasant surprises on tax day.
What’s more, in the case the Australian Taxation Office (ATO) audits your business, you’ll have a clean audit trail that minimizes the potential for legal issues.
3. It Helps Establish Your Business Credit
Setting up a business bank account allows you to establish a financial relationship for creating credit. This is beneficial when you decide to get loans in the future. In general, lenders will look up your business’s credit score and history when considering whether or not they should loan you money.
Whether you need a loan to finance equipment, lease an office space, hire more employers, or any way to expand your operation, a good business credit history can help you get access to funds, with a decent interest rate.
4. It Gives You Access To Business-Specific Banking Services And Perks
Having a separate bank account for your business finances can make you eligible for certain rewards and perks as part of your banking relationship. Some business bank accounts and credit cards may offer significant cashback rewards or longer grace periods to pay your business’s monthly bills or other tools that can help in managing your monthly transactions.
For start-ups, you may have simple needs at first. However, as your business grows, you may need more advanced financial services that can help streamline business operations. Some of the common banking services you may need as you expand include:
- Cash flow management
- Deposit and cash management
- Accepting credit card payments or merchant account services
Even if you don’t need these banking services yet, setting up a business bank account can help put you in a better position to grow.
5. It Makes You Look Professional
Setting up a bank account for your business can show the world that you’re a professional company. It also shows that you’re serious about managing your company’s finances, for instance, using a business checking account to pay your vendors and suppliers.
In addition, doing transactions from a business bank account assures customers and clients that your venture is legit and not just a hobby. It helps in establishing credibility and trust for your brand when starting out and as you grow your business.
Regardless of your company’s size, financial strategic goals, and the industry you belong to, a business bank account is necessary to help grow your business. It helps make your business look legitimate and professionally established in the eyes of the financial system. It makes your financial management a lot easier, allowing you to save money, manage risks effectively, avoid headaches, and hasten your company’s growth. This, in turn, harnesses your brand authority, gaining your target audience’s trust all the more.