If you own a business then you may want to consider opening a separate business checking account. It may seem like too much of a hassle, but there are great benefits that you’re missing out on by just using your personal checking account.
Especially as your company grows, you want to make sure your business is doing the best possible. So if you’re interested, keep reading to learn more about the Advantages of a Business Checking Account.
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Table of Contents
Organized Business Records
With a business checking account, you can keep your business accounting program records organized. A business checking account separates your personal and business transactions, so all your business transactions will be tracked on a separate statement.
Thus, it’s easier to monitor your business’ profitability and determine profit margin.
Minimize Checking Account Fees
Due to the fact that business checking accounts deal with larger and more frequent deposits compared to personal accounts, the fees often vary. For instance, online banking is usually free for individual accounts, however business accounts may have fees.
So make sure that you compare accounts closely and utilize features to make sure you’re getting the most out of your account. Also, make sure you learn about the Best Ways to Manage your Checking Account.
- Go Paperless: Going completely digital may pay off and if your bank has deposits through their app, have e-statements, etc. then some accounts will waive the monthly fee!
- Free ACH Transfers: If you plan on transferring money frequently then look for a bank that allows free ACH transfers. Also, read up on ACH vs. Wire Transfers!
- Activity Limits: If your business makes a high number or dollar amount of transactions, closely compare the monthly activity limits on any potential checking accounts to find one that works best for you.
- Bundled Accounts: If you bundle multiple accounts together, it may save you from paying certain fees. For instance, when you link a business checking to a savings account, merchant services account, or IRA, that often waives the monthly fee.
Accurate Taxes and Deductions
Having a separate account for your personal and business checking account doesn’t just help you stay organized, but you may help you when it comes time to file your taxes.
- Stay Accurate: A business checking account helps to ensure you file taxes accurately. It’ll simplify many things when you’re able to look at your business account statement and understand your tax return. Accurately filing taxes becomes harder when you mix personal expenses in the same account. If you do not file taxes accurately, you could face IRS penalties.
- Deduct Business Expenses: This may seem complicated, however having a separate account is a huge advantage when you’re trying to prove to the IRS that your expenses are related to your business. And having a business account supports that you’re able to deduct the expenses for your business. Also learn about Taxes on Deposit Account Earnings.
Multiple Business Account Signers
One of the perks of having a business checking account is that you’re able to have multiple signers. This means that other people such as your partners and employees are allowed to use your account.
- Access: When you’re running your business, this account allows your employees to work on administrative banking duties which gives you more time to focus on more time consuming duties such as revenue-generating aspects of your business.
- Security Measures: Although this is a very convenient feature for your business, make sure you’re careful to who you allow onto your account. Signing up for fraud alerts can be a smart way to notice a compromised account early and avoid a major disruption in the financial activities of your business.
Accept Credit Card Payments
Since the usage of plastic is so prominent nowadays, if you can only accept cash and check payments, your customer pool will be limited. Fortunately, opening a business checking account may give you the power to process debit and credit card sales, letting you serve a larger number of customers.
You can set up a credit acceptance system through the bank with your business checking account. You may have to pay the bank extra to accept card payments, but you may benefit more from not running a cash-only business. Make sure you look into maintenance and transaction fees before you sign up for credit card processing services.
Get Full Business Credit Card Benefits
Business credit cards come in many types, each with its own set of perks that appeal to a range of business owners. It’s important to consider what type of card would benefit your business the most. Feel free to compare some of the Best Business Credit Cards we feature here on HMB.
- No Annual Fee: Many credit cards offer no annual fee, so it’s more important to check out the other benefits and fees of the credit cards you consider.
- Travel Perks: If you or your business travels a lot, compare credit cards that tie your purchases to airline miles or travel discounts. However, many airline-affiliated credit cards charge an annual fee, so consider the cost and the amount of money you plan to spend for your business versus the travel benefits you gain.
- Business Rewards: If you purchase office supplies every day, often pay for fuel, or take your clients out to lunch, you may reap more benefits from a card that offers rewards or cash back for these types of purchases.
In addition, you should consider consider some other issues before you open up your business credit card account.
- Payment Habits: If you regularly pay off your balances each month, a card that has more perks but comes with a higher annual interest rate could be well worth it. But, if you tend to carry a balance from month to month, a card with lower interest rates but less rewards will probably save you more money in the long run.
- Multiple Cards: If you plan on issuing cards to employees for purchases, you may want to look for a business credit card account that offers additional cards at no cost. Many business credit cards offer this option and if your card comes with rewards, you can earn points or miles towards those rewards much quicker with employee cards. In addition, many business credit cards have the option to track card spending and have spending caps, so your employees don’t overspend.
- Money Management Tools: Online management tools and end-of-year summaries of charges can come in handy when you’re constantly checking credit card purchases and making sure your expenses and deductions are accurate at tax time.
- Security Measures: Safeguard your credit by signing up for fraud alerts. This way, you can get notified about a compromised account early and avoid major disruption in financial activities of your business.
Look Professional and Gain Bank Relationships
Whether you’re a up and coming company or an established company, looking professional is important. Paying vendors with a check with your personal information on it can look unprofessional because they don’t know what your business is.
It is the same the other way around, when someone has to pay your company. If they just address the check to your personal bank account, it just doesn’t fit the image of a professional.
Opening a business checking account can not only give you access to all the features of a more professional account, but it can start a growing relationship with your bank. A relationship with your bank is important, especially if you own your own business.
This will give you access to small business loans in a shorter period of time since the bank already knows you well. You might also get better loan terms.
Compare Business Checking Accounts
• Open a Huntington Unlimited Plus Business Checking Account
• Earn $750 bonus when you open a Huntington Unlimited Plus Business Checking account and make total deposits of at least $20,000 within 60 days of account opening.
• The $750 bonus will be deposited into your account after all requirements are met.
• Enjoy overdraft protection with no annual fee or deposit-to-deposit overdraft protection with no transfer fee!
• Bonus Service. Choose one bonus service such as fraud tools, discounts on payroll services, or Huntington Deposit Scan®
• Ideal for businesses with higher checking activity and greater cash flow needs.
• Open a Huntington Unlimited Business Checking Account
• Earn $400 bonus when you open a Huntington Unlimited Business Checking account and make total deposits of at least $5,000 within 60 days of account opening.
• The $400 bonus will be deposited into your account after all requirements are met.
• Get Overdraft Protection Account with no annual fee, or Deposit-to-Deposit Overdraft Protection with no transfer fee.
• Enjoy unlimited transactions. And up to $10,000 in cash or currency deposits monthly in-branch or at an ATM at no charge.
• Designed for businesses with higher checking activity and greater cash flow needs.
• Bonus service. Choose one bonus service such as fraud tools, discounts on payroll services, or Huntington Deposit Scan®.
• Open your Huntington Business Checking 100 Account today!
• Earn $200 bonus when you open a Huntington Business 100 Checking account and make total deposits of at least $2,000 within 60 days of account opening.
• The $200 bonus will be deposited into your account after all requirements are met.
• Overdraft Protection Line of Credit available, or Deposit-to-Deposit Overdraft Protection with no transfer fee.
• Do business without a minimum checking account balance fee or maintenance fee.
• No monthly maintenance fee applies to this account.
• Enjoy up to 100 monthly transactions. And deposit up to $5,000 in cash or currency monthly in-branch or at an ATM at no charge.
• Ideal for start-ups and small businesses with lower balances and checking activity.
• Bonus Service Trial. Free 120-day trial of a fraud tool: Reverse Positive Pay.
There are many advantages of a Business Checking Account as stated above such as tax deductions, multiple signers, and minimizing fees. Separating your personal from your business will simplify many things, however finding the account that is best suited for you is key.
Therefore, I recommend that you carefully compare and contrast all of your options because every business is unique.
If you are interested or looking for a business account to apply for, find more of the best business bank bonuses from our list of nationwide checking accounts and pair it with a business credit card.
If you’re looking to avoid any fees that come with a bank account, see our list of the best free business accounts.