For small businesses, it’s crucial to establish a system that will help you manage your company’s finances efficiently. Opening a business account with a trusted financial institution is one of the most important steps. Whether it’s business accounts, a loan, credit monitoring, or just daily deposits, you should work closely with a financial institution to ensure the financial success of your business. Here are 4 banking tips for small business owners to keep in mind while building your business’s financial foundation.
1. Separate Personal Banking from Business Accounts
Even if you run a small business, try to avoid combining personal and business accounts. By mixing up your personal and business money, you risk ending up mismanaging your company’s funds. In order to run your business successfully, you need clear, accurate financial records for smooth daily operations as well as tax filings when the time comes.
2. Understand the Business Checking Fees
Before you open a business banking account, make sure to understand the business checking fees and how they’ll affect your daily operations. If you have a business with high volumes of transactions or handle a lot of cash deposits, you’ll likely have to pay a variety of fees. Some accounts go with a flat fee, while others charge small fees for various transactions. Talk to a financial institution about your business, and they will help you pick the right account for your business.
3. Take Advantage of Bill Pay Services
The financial institutions offer online bill pay services that make the process of paying vendors, contractors, and various invoices way easier. This online service can save much time as you don’t have to go to a physical branch or use an accounting service to cut checks. If you make the same payments to vendors or other third parties, their information can be saved to make transactions even faster next time.
4. Master “the 5 Cs” of Credit
If you consider applying for a business loan at some point, there are a few things that you should do to make yourself a strong lending candidate. Apart from keeping your business account in good standing, you should work on the 5 Cs of credit:
- Character: Your overall trustworthiness perceived by your financial institution
- Capacity/cash flow: Your financial standing and your ability to repay a potential loan
- Capital: The amount of money you or other individuals have invested in a company
- Conditions: Your company’s strategy for overcoming turbulent times and finding a path for success
- Collateral: Assets the financial institution can seek out if the loan can’t be repaid.
If you’re a small business looking for a trusted financial partner, look no further than Mechanics Cooperative Bank! Contact us today for a business account, loan or more information.