Starting a small business is an exciting time when you are fulfilling you passion and earning money doing it. However, there are a lot of details, both big and small, to pay attention to so you make sure it is running smoothly. One of the big details you should be thinking about from the very beginning is how and when to set up your small business banking account. Here are a few reasons to get a bank account set up right away.
Separate Your Funds
Depending on how small your “small business” starts out, it can be tempting to begin by simply using your personal checking and savings accounts, since they are already set up, there is no additional paperwork or hassle needed, and you can get moving right away. Plus it’s great to see your personal checking account grow as you begin earning money with your business. The problem is that over time it can be very difficult to separate out “business” from “personal” expenses, and come tax time you may find yourself in a big mess financially.
Instead, start by opening a small business checking account. In some cases it may be beneficial to link it to your personal account—for example if you work with California Bank Trust for your individual checking you could also open a small business account there and link the two—but having all the transactions separate will assist you when it comes to record keeping for your business.
Build Professionalism
Having a separate small business bank account can help you look more professional. If you do not have separate bank accounts and you’re working with clients writing checks on a personal account, they are less likely to take you seriously. Additionally, if you have clients who need to write checks to you, it will seem much more professional to have them write it out to a business than your own personal name. Even if your venture is just part-time, it’s important to have people view you as a professional in your line of work.
Do Not Miss Deadlines
Last, if you are mixing your business and personal accounts, it can be easy for small transactions to get lost in the shuffle. You may end up missing deadlines or not paying bills on time, so it’s best to have two separate accounts so you are able to easily scan and review all your transactions.
Whether you are working your business part-time or full-time, having a separate account for small business banking can make a big difference for record keeping, and for the general professionalism that you convey through your venture.