Things you need to know about bank accounts for small businesses
If you are a new entrepreneur raring to compete with the big daddies in the market, you have a lot on your plate. One of the most important steps to take care of as you start a business is to open a small business bank account. It will help you manage the finances and also let you maintain a higher level of professionalism when you are dealing with third-parties.
Importance of a small business bank account
When you open a small business bank account, you are basically separating your personal account from the bank account. This helps keep your business income and expenses separate from your personal finances. It is also important to maintain a separate bank account for the purpose of taxation in case of a company or a partnership. It will maximize your tax deduction and help manage the cash flow of the business. The bank account may also be linked to the business credit card, thereby making it easier for you to keep a track of the expenses. However, as a sole proprietor, it is not mandatory for you to open a separate account for taxation purposes.
In the case of a small business, you will have a number of deposits and withdrawals made from time to time. As such, you may go for additional services like merchant facilities and debit cards to make it easier for you to transact seamlessly. There are several reasons why a business account is best for you. First of all, the interest rates on the account are high as compared to other accounts. In addition, the account comes with a business loan, overdraft account, and credit card facilities.
Things to consider before opening a business bank account
Remember to consider the size and type of your business before you make a decision to open an account. Go through the features offered by different banks and the fees charged by them for the same. Learn about the flexibility of the bank policies, its branches, online banking facilities, and the size of its network. Once you have shortlisted a few banks, always choose the one that offers the highest interest rate and has the lowest fees with regard to transactions. The account will help you meet the requirements of taxation laws. Even if you are a sole proprietor today and you convert the business to a partnership in the future, your small business bank account will be of use.