Does your business have a checking account? If the answer is no, then it may be time to consider opening one. Having a business checking account for small business provides entrepreneurs and business owners with necessary tools to help them run their companies and achieve their most important growth goals.
Here at Addition Financial, we talk to small business owners every day about the financial aspects of business growth. We offer several business checking accounts that are designed for small businesses. To help you understand why you need a checking account, here are seven benefits of a business checking account to consider.
What is a Business Checking Account?
Business checking accounts are accounts that are designed specifically to meet the needs of any small business owner who needs some help managing their business finances. They come with most of the same features you would find in a personal checking account, including the following:
- Business checks
- Business debit card
- Access to online banking and mobile banking
- Access to financial education and information
In addition to these typical checking account features, you can also expect to find small business checking account features such as payroll deductions, direct deposit, business reporting options and ACH transfers.
As a small business owner, you can rely on your business checking account to provide you with information and reports that can help you keep accurate records of your finances, monitor your cash flow and streamline your business operations.
Even if your business is small or just getting started, business banking is a must. We always recommend keeping personal and business finances separated. With a business account, it’s easy to track, file and pay your taxes.
What Features Should a Small Business Look for When Choosing a Business Checking Account?
Before you open a small business checking account, you should know which features are most important to you and your business. Here are some features to look for:
- Business checks: You’ll need checks to go with your business checking account. Some financial institutions provide a small supply for free, but you should expect to pay for checks.
- Business debit card: Most business checking accounts come with a free debit card that you can use to withdraw money from your account or make purchases.
- Business reporting: Your business checking account should allow you to view your account activity and run reports when you need them for taxes or other tasks.
- Payroll management features: Even if you outsource your payroll, it may be helpful to be able to manage payroll directly from your business checking account with features such as payroll tracking, direct deposit and ACH transfers.
- Low monthly fee: You’ll likely need to pay a monthly fee associated with your small business checking account, but you should look for a credit union or bank with a low fee. Some financial institutions may waive the fee if you maintain a specified minimum balance. (Note: free small business checking accounts are sometimes available, but they often come with limited features that may make them unsuitable for your needs.)
- High transaction limits: It’s common for business checking accounts to impose a fee for transactions over a set limit. We suggest estimating your monthly transactions to choose the right account. For example, Addition Financial’s Business Essentials account comes with 100 free transactions and our Business Enterprise account comes with 250 free transactions.
- Interest or dividends: Some business checking accounts pay dividends or interest. If you choose an account that does, your balance will be working for you and earning a return provided you meet the requirements.
- Online and mobile banking: It’s a must to have access to mobile and online banking features, so you can review your account and access your money as needed.
- Cash deposit: We suggest choosing a local financial institution with branches near your business if you accept cash payments and need the option of making a cash deposit.
- Electronic deposits: If your business receives checks in the mail, you may want to look for a financial institution that will provide you with the equipment necessary to scan and deposit checks in your office.
- Merchant services: Some business checking accounts include an option to accept and process credit card payments.
- Features specific to your business: Some businesses require additional features. At Addition Financial, we offer Business Access Checking for start-ups and very small businesses and Business Non-Profit Checking for non-profits.
These features should cover most of your needs as a business owner. You should keep in mind that there may be fees in addition to the monthly fee, such as per-transaction fees if you exceed the account limit of free transactions and ATM fees.
What Are the Benefits of Having a Business Checking Account as a Small Business?
There are a lot of ways that having a business checking account can help you as a small business owner. Here are seven that can give you a business advantage and help you achieve your goals.
#1: Tax Preparation and Filing Will Be Easy
Preparing and filing taxes for your business can be time-consuming and mistakes may be costly. With a business checking account, it’s easy to track your business expenses and debts. That means that you’ll be able to categorize deductible expenses as well as keeping track of payroll and other items that may impact your business taxes.
On a related note, you’ll be less likely to be audited if you keep careful records. If you are audited, you’ll have all the information you need at your fingertips, which can help fast-track the audit and minimize your risks.
#2: You Can Establish, Build or Repair Business Credit
Having a good business credit score is essential if you want to attract investors or qualify for a business loan or line of credit. A high score tells investors and lenders that you take your financial responsibilities seriously and that you’re a good risk.
With a business account, you can take advantage of online bill pay to automate payments and increase your business credit score, which can help you later as you either grow or sell your business.
#3: You’ll Get Access to Smart Money Management Tools
Even if you’re knowledgeable about business finance, it can still be helpful to choose a financial institution that provides a suite of online resources that include valuable information about business finance.
Resources may include blog posts, guides, eBooks, podcasts and other items. You can use them to educate yourself about business financial management. You may also have access to business calculators and ad hoc reports to make sure you understand what’s happening with your company.
#4: You Won’t Need to Worry About Separating Personal and Business Finances
One of the biggest mistakes small business owners make is commingling their personal finances with their business finances. Doing so can make it difficult to identify and justify deductible expenses. It may also be a red flag to the IRS.
With a business checking account, your finances will be separate and you’ll have no problem identifying and documenting business spending.
#5: You Can Automate Bookkeeping by Integrating with Your Bookkeeping Software
Business bookkeeping can be time-consuming and stressful. Most small business owners aren’t professional bookkeepers or accountants, which can increase the risk of costly mistakes.
If you choose a business checking account that can integrate with your bookkeeping or accounting software, you can eliminate repetitive data entry. You’ll be able to import transactions directly to your software, which will ensure that your entries are accurate and that you always know what’s happening with your money.
#6: You’ll Avoid Personal Liability for Business Debts
One of the riskiest things about intermingling your personal money with your business money is that doing so muddies the water regarding liability. If your business were to be sued and found liable for damages, commingled assets could be on the line and that could leave you in a tough spot financially.
With a business checking account, your personal finances will be shielded from any financial liabilities associated with your business. (We should note here that you should also choose a business structure that limits your liability, such as an LLC or an S Corporation.)
#7: You’ll Legitimize Your Business
In the world of business, looking professional is nearly as important as anything else you do. If you don’t have a business checking account, you may need to use personal checks to pay for raw materials, services or inventory.
If you have a small business checking account, your business transactions will always look professional. You’ll have separate business checks and accounts, which sends the signal that you take your business seriously–and that others should, too.
Streamline Your Business Finances with Our Business Checking Accounts
Running a business is challenging no matter what. Having a business checking account can streamline your finances and operations, leaving you free to run and grow your company. The seven benefits of a business checking account that we have listed here prove that.
Do you need a business checking account with smart money management tools and features and affordable fees? Addition Financial is here to help! Click here to learn about our business checking accounts and open yours today.
Posted on Nov 8, 2023
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