Whether you should open a separate bank account for your business depends on how your business is structured and what its name is. In most cases, you need a separate account if your business is a legal entity that is independent from you. Corporations, limited liability companies, and incorporated businesses are all considered separate legal entities. Sole proprietorships do not need a separate bank account.
Opening a separate bank account for your business is a necessary step for any new business. It is a relatively easy process and requires no special skills. You will just need to provide the required documentation and decide what kind of business bank account you need. Basic checking accounts may not be enough for a new business, but you might want a more comprehensive account with special cash management services, free companion savings accounts, and a business debit card.
Another reason to open a separate bank account for your business is the ability to separate your personal and business finances. You can write business checks out of your personal account, but that can hurt your business’s image. It can also send the wrong message to potential customers. It can give the impression that you’re new and unable to keep up with the pace of business. Instead, open a separate business account and use it to track your expenses.
It’s important to remember that if you decide to run your business out of your home, opening a separate bank account for your business will make it much easier to track expenses. Having a separate business bank account can also help you avoid tax problems, as opening a business bank account with the IRS indicates that you are running a legitimate business. Besides, if you’re running a small business, a separate business bank account will give you more tax deductions and credits.