Whether you are in the early stages of your business or side hustle or you are a seasoned business owner it's very important you have separate financials for your business. These separate financials should also include separate business bank accounts.
Having separate accounts might seem like an annoyance but from a tax and legal perspective, it's something every serious business owner should have.
Your business finances will be less complex and you'll have less stress and confusion when it comes to determining what expenses are personal and what are business-related.
Below are the 3 business accounts you should have as a business owner:
1. A business checking account
If you are accepting payments from your customers, issuing refunds or making purchases, you need somewhere to process and keep those funds. That place would be in a business checking account.
Your business checking account also provides you with a place to monitor your business cash flow and day-to-day transactions. You can do this easily by connecting your account to business money management tools like Quickbooks or Wave Apps.
You'll also have the ability to delegate financial tasks to trusted employees by adding them onto the account. This way you can avoid having to give them cash advances or reimbursements for certain business transactions they can make on your behalf.
You'll also be able to monitor the transactions they are making easily by logging into your account and you can also set limits to how much they can spend.
In addition to having a business checking account, you can also start establishing a relationship with your bank overtime in the event that you need financing for your business in the future.
2. A business savings account
It's certainly a good idea to have business savings accounts where you can put aside funds for things like taxes, payroll, future projects, products or whatever long-term ideas you might have in mind for your business.
Having business saving means that instead of having to rely on outside financing and paying interest you may be able to -finance things in your business on your own. It's also a good idea to separate these accounts by purpose to avoid any confusion and for proper bookkeeping.
3. A business credit or charge card
Having a business credit or charge card allows you to establish your business credit history with the commercial credit bureaus over time. This is important in the event that you require further financing for your business.
In addition, having a business credit card may provide you with certain types of purchase protection and may also provide you with the benefit of earning rewards or points based on your transactions.
You'll also be able to add on employees and monitor their transactions. Keep in mind though, that similar to your personal credit cards, you should avoid carrying a revolving balance and instead pay your balance off in full each month.
If you are a business owner but you don't already have your business accounts set up, you should consider getting them set up as soon as you can.