Opening a new business and running a new business is a momentous task that requires time and planning. New business owners tend to initially use their accounts for business expenses, which is wrong. Opening a business checking account for your company should be on your to-do list.
A business checking account has many benefits to business owners, and you shouldn’t open a business without getting one. Here are the advantages of a company business checking account.
1. To Simplify Bookkeeping Efforts
Using a personal account for business purposes makes it hard to balance business books. Business owners must determine which private and business-related expenses are when accounting for costs and incomes.
When you open a business checking account online for your company, all business incomes and expenses reflect on a single bank statement. A bank’s monthly report allows business owners to automate the bookkeeping process through accounting software.
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2. Easy Tax Preparation and Returns
A company business checking account is compatible with tax preparation software to automate the process. Companies or tax accountants can link a tax software to a business account to generate financial statements for tax purposes. It makes preparing and filing business tax a hassle-free process when the time comes.
3. Establish an Audit Trail for IRS
Businesses can enjoy tax deductions from the IRS for certain business expenses. Companies need to prove that whatever cost qualifies for a tax deduction is business-related. A company account provides irrefutable proof of the business expense and to whom the funds were paid for a product or service. Claiming tax deductions is straightforward when companies have financial statements that justify the claim. Additionally, a business account shows the IRS that your company is legit and not a hobby.
4. Why Opening a Business Checking Account will Improve Credit Score
It’s not common knowledge that businesses have a credit score, and it determines the amount of credit a company can get. Business accounts allow companies to build a high credit score that will enable them to get credit products from various financial institutions. The bank statement acts as a data source to determine a company’s financial capacity.
5. Protection from Business Debt Liability
A business owner that uses personal accounts for business transactions faces the risk of paying business debt from personal savings. Business owners who have business accounts protect their savings when a business goes under when it is indebted.
When you have dedicated business accounts, creditors can’t get payments from your account. Creditors are legally bound to recoup any debts from the company property, funds, and other assets a business may have. Opening a company checking account can protect business owners from losing personal assets.
Opening a Business Checking Account Online
It’s possible to open a checking account online, but you need to collect all the necessary documents before starting the process. Check out your financial institution’s website to note the requirements for business accounts. The required documents for account opening are an Employer Identification Number or a Social Security number, business registration documents, business license, and ownership details.
Get all the documents ready by your side before starting the online application process. Provide honest information as financial institutions can choose to verify the information provided before approving a business account.