Business Checking Account

The Benefits of Having a Business Checking Account

Picture this: you’ve come up with a million-dollar business idea, pitched your idea to a business lender, created a business plan, and you’re ready to get to work. Before you check everything off your to-do list, though, there’s still one thing left to do. You need somewhere to store all of your fortunes—besides under your mattress. This is where a business checking account comes in handy!

I’m Jordan Wheeler, Business Services Representative at Pelican State Credit Union, and I wanted to break down all of the benefits that come with having a business checking account. If you’re looking to start a business or if you already have a business, a business checking account can be extremely helpful for you.

Let’s break down the benefits of having a business checking account:

More Organized Business Records

Once you open a business checking account, your business records are kept separately. This would be beneficial to you because you want to know the true income and expenses of your business.

If you are constantly having to split up your personal expenses from your business expenses, it could cost you a lot of valuable time. After all, time is money!

Freedom to Accept Credit Card Payments

You limit your customer base if you only accept cash and checks. If you have a business checking account, you can accept credit card payments from your customers that will deposit directly into your checking account. Yes, there are fees with accepting credit card payments, but you could make more money since credit card payments are becoming more common among payment methods.

By receiving your deposits directly into your business checking account, it will also help you be more accurate in your book keeping.

Convenient Mass Payments

Having a business account allows you to make mass payments through Online Bill Pay to your creditors to make paying your bills quick and efficient. You can also pay your employees through your business account electronically.

This way allows your employees to have paystubs to provide as their proof of income, and you don’t have to write out so many checks per payroll period. This will save you an immense amount of time as a business owner.

Multiple Authorized Signers

Being a business owner comes with constantly being pulled in many directions. You not only handle Operations, but also Human Resources, Marketing, and many more roles! Having multiple signers on your business account allows you to delegate some of your responsibility of change orders, deposits, and withdrawals to another trusted team member. You always want to make sure you are aware of the transactions taking place by your appointed staff to ensure accuracy.

Better Relationships and More Credibility

Opening a business account allows you to establish a financial relationship with your credit union or bank. This is crucial as your business grows because you may need a small business loan to purchase equipment or supplies.

The same can be said with vendors. When you pay your vendors, you want to be able to give them a check from your business. I’d advise against giving them a personal check, cash, or Venmo for payments because it doesn’t look as professional.

Clear Audit Paper Trail

The Internal Revenue Service, or IRS, prefers that you keep good records of your business. This way, you are able to accurately prepare your financial statements, prepare your tax returns, and track your expenses.

Should you be chosen for an audit, it allows for an easier process due to the separation of personal and business transactions and expenses.

Less Personal Liability

Most people create a business with the state to minimize their personal liability. In the business world, we call this a Limited Liability Company (LLC). Some people forget about the importance of keeping business separate from personal finances.

If for some reason your business can not pay its creditors or is being sued by someone, you want to make sure you can prove that your business is separate from your personal account. I would strongly encourage you to do this because if they see the merging of business and personal funds, both your business and you can be liable.

Accurate Taxes, Deductions, and Bookkeeping

When keeping your business records organized and separated, it shows a clearer picture to your certified public accountant (CPA) what your expenses were for the year. This allows them to apply certain deductions to save the business owner when tax time comes around.

Keep in mind, you may not want to write everything off because then you won’t have provable income to borrow money from financial institutions. It’s important to have a CPA who understands business tax returns.

Special Discounts and Promotions

When you open your account with a credit union or bank, there may be special promotions for free checks, a deposit stamp, or even lower loan rates. It’s important to take advantage of these opportunities when you can so that your business doesn’t have to pay as much money out of pocket.

Which of these can benefit you the most? Drop a comment below and let us know!