A business checking account is one vital aspect that you require if you want to expand your small business or if you are thinking of venturing into business. This is the account that will save you from the challenge of dealing with tax as well as legal issues that can be very time consuming if you don’t have such an account. While most people especially those thinking of going into business do not know the importance of having such an account, there is a lot of information on the benefits of separating your personal account from that of your business.
Importance of the account
Take for instance someone who uses one account for both business and personal. If you are facing a legal action that concerns your business you will need to have different accounts. If not, then you are at a high risk of losing your personal properties or even finances. This can be very detrimental to you, your family and even you’re your business. There is need therefore for people to have separate business checking account to avoid this unnecessary mixing up. With the account you can also be able to manage expenses of your business separately instead of trying to manage both personal and business ones put together.
Difference with personal account
Business checking account differs greatly with personal account. With a business account, you are restricted on the number of transactions you can make in a certain period. This is because you are given a free charge on the transactions you can do unlike the personal account where you can transact as much as you want. The banks make money because a business account has numerous activities than that in a personal account. Any extra transaction that you make out of the required number is therefore charged by the bank. The interest rates given to business accounts are also relatively lower as compared to that given in personal ones.
Cash Deposit Restriction
With a business checking account the amount of money that you can deposit with the bank is restricted. Usually, the bank may give you a certain amount of money that you are allowed to deposit for free within a period of time, say a month. In the event that the amount of deposits you make exceeds that required then the bank will charge the extra amount. It can be assumed that banks prefer handling money that has been wired electronically as compared to the dealing with cash.
Selecting A Bank To Open Business Account
When selecting a business checking account you need to factor in the geographical location of your enterprise and that of the bank. It is also important that you know the average transactions your business might have so that you can have a better deal from the bank. You should also be in a position to approximate the amount of cash deposits that you can handle in a month or a day to reduce the expenses you may incur should you exceed the amount you are required to deposit.
A business account is important for the development, expansion and success of any business. It helps you to accurately determine your expense, your profits and losses hence assisting you in making major decisions.