Do you use a personal account for your business transactions? If you do, you may want to open a business account. There are many benefits of a business account. As you continue to grow your company, keep these business bank account benefits in mind, according to www.patriotsoftware.com.
Benefits of a business account
You are not required to have a business bank account, but it is a good idea to use one. Take a look at these five benefits of a business account:
Your business records are organised:
You can keep your small business accounting programme records organised with a business account. A business account separates your personal and business transactions. All your business transactions are tracked on a separate statement. Separating your business transactions from your personal transactions helps monitor your business’s profitability.
For example, you look at your business current account statement for the past month. From the statement, you see your business earned N10,000 and spent N2,000. You can subtract N10,000 in earnings from N2,000 in business expenses to get a net profit of N8,000. The net profit (N8,000) is the bottom line of your business account statement.
If you mixed personal and business transactions into one account, you might have a hard time trying to determine profit margin. To find your profitability, you must remember which expenses were personal and omit them.
Accurate taxes and deductions:
Separating business transactions into an account does not just help you organise financial records. A business account also helps you file taxes. To file business taxes, you need your business transactions separated from your personal transactions. A business account helps to ensure you file taxes accurately. You look at your business account statement and record the figures on your tax return. Accurately filing taxes becomes harder when you mix personal expenses in the same account.
You can deduct business expenses from your tax return. Deducting business expenses may be easier if you use a business account. The business account statement supports that you can deduct the expenses for your business.
You can accept credit cards:
You limit your customer pool and potential sales when you only accept cash payments. Many consumers pay with credit cards over cash. Accepting credit cards helps you serve a larger number of customers.
You can set up a credit acceptance system through the bank with your business account. Or, you could set up a merchant account with your business account.
You may have to pay the bank extra to accept card payments. But, you might benefit from not running a cash-only business. Look into maintenance and transaction fees before signing up for credit processing services. Consumers prefer paying with debit cards and credit cards over cash.
Multiple business account signers:
You can have multiple signers on a business account. In other words, you can allow other people to use your business account.
While you run your business, an employee can do some administrative banking duties. This could allow you to focus more time on revenue-generating aspects of your business. If you allow others to use your business account, be careful who you give access to. Be sure you trust each person who handles your business’s money. Trust is essential for sole proprietors who give employees access to their current accounts.
You look professional and gain bank relationships:
Whether you are a startup or an established business, you want to look professional. Do you pay vendors with cheques that have your personal information printed on them? Or, do you tell customers to issue payments to your personal name? A business bank account gives you a more qualified look.
Opening a business account can also help you form bank relationships. Relationships with your banking professionals can help you grow your business. For example, if you need financing, you may want a small business loan. A relationship with your bank representative might help you get better loan terms.