5 Reasons Why Having a Business Account Is a Must
Regardless of the size of your business, having a business account is an absolute must. It is certainly easier to manage everything with a single personal account but it will only make things more complicated.
Having a business account offers several benefits of which you need to be aware.
1. Better book-keeping
Managing a business is all about knowing what money comes in and what money comes out. When you also add personal expenses into the mix, it will make it much more difficult to efficiently run your business.
Managing the finances is nearly impossible when you mix the two.
2. It makes it easier to run audits
You do not have to track your business account every single minute.
However, separating the business account from the personal account will make it much easier to perform an audit. You can check transactions, track payments or find the trails or when a red flag occurs. When an external audit is performed, having a dedicated business account means that the audit will take less time and you will need less justification paperwork for the auditors.
Having a business account is also a sign of professionalism.
A business that is run well, will always have a dedicated account. It also creates more credibility and establishes an elevated level of trust with both your clients and suppliers.
4. Credit score
All businesses get a credit score.
If you need to access a loan for your business, you need to have a high credit score. This score determines your worthiness to access financial products for your business. When personal expenses are mixed in, banks are less likely to offer you a loan. What banks do is perform audits of businesses before providing any type of financing.
This then means that your book-keeping needs to be impeccable.
5. Simplified tax returns
When you mix business expenses with personal expenses, doing taxes can become a genuine nightmare. Business expenses can be written off when it comes to taxes but if there are personal expenses mixed in, you are more likely to make mistakes.
You can either write off personal expenses or miss writing off business expenses. It can take hours if not days to make sense of things when these two are mixed. For this reason, having a dedicated business account is highly advisable. It will save you time, money and it will make it much more difficult to make mistakes.