If you’re running a business, it can be beneficial to separate your personal and business transactions using a business checking account. Business checking accounts are bank accounts specifically tailored to the fit the needs of business owners. This article will cover why you might decide to get a business checking account and what you should look for in a business checking account.
When should you get a business checking account?
The primary reason for having a business checking account is to keep your personal finances and business finances separate. This eliminates the risk of using company money for personal expenses and personal money for company spending. Putting a huge wall between your finances can keep you from over-spending or under-saving in both business and personal domains.
Another benefit of having a dedicated business checking account is that taxes are simplified. When you know exactly which expenses were part of the business, it won’t take long to work through your filings come tax season. In the unfortunate even of a tax audit, a separate business account will also make the process easier.
Business checking accounts can also help you with budgeting. If your business and personal funds are jumbled together in one account, it can be difficult to ascertain just how much money you have. You might spend more money just because you feel like you have more money. If you are your entire business or you freelance, a business checking account can help you navigate the “feast and famine” nature of working on your own. Set up an automatic monthly transfer from the business account to your personal account as a paycheck.
These accounts are also great if you have any employees who handle money. The last thing you want to do is send and employee out with your personal credit card. No matter how much you trust them, it is a recipe for disaster. With a business account, you can be sure that only business money is going towards your purchases.
What should you look for in a business checking account?
What you look for in a business checking account depends on the needs of your business. You’ll consider many of the same factors as you would if you were looking for a personal account, but with a few key differences. Here is a list of some things you should definitely investigate.
• Cost: Does the bank charge you simply for having the account or is it free? If the bank is offering great services in other areas, it may be worth it to get an account that is not free.
• Fees: Yes, the dreaded bank fees are a consideration. Think about what kinds of things you will be using the account for dgfev online casino and if the fees will affect you. You should be sure online casino reviews to read up on fees for ATM use and overdrafts.
• Interest rates: Ideally, you can make a bit of a profit from the money you leave in the bank. Interest rates are still quite low, but this can still be a deciding factor.
• FDIC insured: You bank must be FDIC-insured; otherwise there is no guarantee that your money will be there when you need it.
• Minimum balance requirements: Does the bank require a certain minimum balance? Is that going to work for you at this time?
• Transaction limit: This is a problem that you might come across with online-only banks, but check to see if there is a limit on the number of transactions you can make in a month.
• Intangibles: You should also consider whether the bank makes an effort to help you understand their services and to be informative. Ideally, you want to choose a bank that you have a good rapport with and that is willing to support you as your business grows.
What are the best business checking accounts?
Only you can decide what the best account is for your business. Be sure to shop around to figure out what works for you. Remember to shop around periodically even after you have an account set up because new banks may start offering better services.
NOTE: This article was written by John Gower, an analyst for NerdWallet, a personal finance website dedicated to helping you save money with financial tips on everything from the business checking accounts to interest rates on CDs.