Reasons to Have a Business Bank Account
The following is a list of a few reasons why every business owner needs a separate bank account for business transactions.
Image-Writing checks or accepting payments through a personal account makes a company appear new, inexperienced, and/or unprofessional.
The Corporate Veil-Personal assets are protected if the business is sued or in debt.
Easy to Accept Credit Card Payments-Personal bank accounts cannot accept credit card payments but a commercial account for a business can.
Easy Tax Preparation-It is easier to classify business transactions when the account is specifically for the business instead of sorting through a personal account for business transactions, where possible deductions may be missed.
Some Common Mistakes to Avoid
- Every bank may have different requirements for setting up an account so call ahead to know what you need
- Don’t open a business account using a personal social security number, make sure to use the company’s EIN (this does not apply to a sole-proprietor)
- Pick a bank that supports your business, don’t just pick your personal bank because many consumer banks or credit unions do not offer all the services a small business may need
- If your accountant/business uses programs like QuickBooks Online and you want to link your bank account to QuickBook’s Bank feed, make sure that the bank you choose has that function. Many big banks are compatible (i.e. Chase, WECU, ICU, etc.)
What You Need to Open an Account
To open a business account, you will need the following information:
- Your company’s EIN/Federal Tax ID Number
- For an LLC or Corporation, you will most likely need the Articles of Organization/Articles of Incorporation
- Some places will require a Certificate of Good Standing (this certificate shows if the company is up to date on state taxes and/or other requirements)
- As a sole proprietor you’ll need only your Tax ID, social security number, and DBA (Doing Business As) if your business name differs from your personal name
Learn more reasons to separate personal from business in Kevin Mercadante article.
Find out more from Nellie Akalp’s article!
Check out more common mistakes in Sammi Caramela piece.
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