Opening a business checking account should be one of the first things on the to-do list when starting a business, after gathering any required documentation to do so. Having a designated business checking account to start managing your new business’s finances correctly is essential for success.
In general, the required documents to open your new business checking account usually include a state-issued ID, Social Security number (sole proprietorship) or EIN (employee identification number), and a business license and Articles of Organization (for LLCs) or Articles of Incorporation (for corporations). They will vary based on the chosen bank and the business’ legal structure. It is also important to note that your business does not need to have any revenue to open a business checking account, as this should be done before products or services are sold.
Once the account is open, you can conduct business with ease, enjoying the many benefits that come with having a business checking account to manage your business finances. When looking at these benefits, it becomes clear why business checking accounts are a priority for new business owners.
Simplify Your Taxes
Being able to separate your personal finances from those of your business is crucial for tax season. By doing so, your taxes can become quicker and more accurate. Not being able to identify and separate these finances could cause several problems. The primary concern is picking out expenses from your personal checking account, which are more than likely to be audited by the IRS. Additionally, not organizing expenses in their respective accounts (personal and business) could also cause business owners to lose out on the money-saving deductions they may be entitled to receive.
Protect Your Personal Assets
As an LLC, personal assets are generally protected if anyone takes legal action against your business. However, not having your business assets separate in a business checking account and other business-related accounts could cause the courts to go after your personal assets. It is always advised to keep your business transactions organized in a business designated account.
Create credibility for yourself and your business by building a foundation of trust with clients by circulating payments in an account under the business name. In addition, this may help a business appear more legitimate. Lastly, having a business checking account can verify the legitimacy of a business when it is time to apply for business loans or business credit cards.
Better Analyze Performance
Having all a business’ transactions in one account paints a clear picture of your business’s performance. These business account transactions also make it easy to immediately see the revenue and costs incurred by the business monthly. This will aid in analyzing the overall performance of the business to determine if and where financial changes need to be made.
Build a Business Banking Relationship
Building a solid relationship with your bank can help get your foot in the door for when the time comes to apply for business credit cards and loans with that same bank. In addition, having a business checking account will signal credit bureaus to create a credit report for your business. Many business owners don’t realize that businesses have credit scores, which are very important when applying for small business loans.
Are you a new business owner? Our business checking accounts are designed to fit any business profile to make your business banking relationship easier and more efficient! Contact us today to get the most from your business deposits with Mechanics Cooperative Bank.