When you start a business, there are often so many things that you have to consider, decide on, and do, that the smaller and more obvious things can slip through the cracks. Where your finances are concerned, you may not think beyond having a business credit card or business loan, until you realize that in actuality, you need a place to organize the cash flow and where you are spending your money. Obviously, you need a business bank account. But what kind?
Determine your type of business
Not surprisingly, there are many different types of business bank accounts. If you walk into your local credit union or bank, and tell the teller that you need a business bank account, you’ll be bombarded with questions about what type of account you want, and you won’t have the answers for them.
Are you a sole trader? Do you own an LLC? Determine what kind of business you own, first.
Benefits of different types of accounts
You’ll want an account for your business that is separate from your personal finances, just because it will make keeping track of things so much easier. Having your business money and personal money separated is important to knowing what you have and don’t have to spend. If you have a startup, some banks will offer an account that is free of fees for a certain period of time, as long as you apply within the first 12 months. Consider things such as overdraft policies, interest rates, and accessibility to funds.
Talk to a representative
Now, it’s time to talk to a representative. Once you’re prepared with what you need and want with your business bank account, you can head to your preferred bank and tell them what you want. Don’t be afraid to shop around until you find the right bank for you and your business. Often, your business bank account will be with a different bank than your personal account is. This is simply because different banks have different policies and benefits, so make sure you find the bank that fits your needs best.
Checking vs Savings accounts
In the interest of taxes, we recommend you get two bank accounts: a checking account and a savings account. Your checking account is where you’ll manage your finances, cash flow, and make payments from. Your savings account should be reserved for putting away funds to be used when it’s time to file your taxes, in the case that you owe anything. Having these accounts separate helps you save up and leave that money alone instead of accidentally using it.