Buchanan Virtual Office, Financial Managing Partner
Many first-time micro and small business owners use their personal bank accounts when they are just starting out. There’s a convenience that comes with this, it’s simpler and we think it’s going to be easy to remember what goes into the business and what’s personal. This is not a good idea for many reasons and while it may seem the least labor-intensive and an easy expedient way, things can get rather hairy in a hurry!
After all, it takes time to set up a new account. It requires a small adjustment in the way that you keep your business records. SO why do it?
1) Creating a business bank account can help you build a business credit history and increase your business’s buying power.
Imagine proving which of your income streams is the most lucrative? Being able to track profits and expenses all in one place makes this easier to do. In fact, setting up recurring bank transactions can help you pay vendors in a timely fashion that helps you look good on paper!
2) Creating a separate account can help you with that all-time-consuming task of….separating your purchases, expenses, and business income. Yep, regardless of the method, you still have to do it. With a separate business account, you’ll:
Less time spent sorting through months of receipts, transactions, and statements trying to remember if what you spent was business or personal
Be able to connect this new account with your accounting software
Easily streamline your record keeping and creates a very clear audit trail for tax purposes
3) Creating a separate account helps you keep an eye on your spending habits and trends within your company
You can make a set amount to draw from the business which helps you to keep a household budget that is cleaner and more manageable.
You can create a bookkeeper’s access for your accounting pro that limits access to all your personal banking information! Your security remains intact! It’s a win-win!