Running a successful small business takes a great deal of patience, dedication and hard work. Occasionally, nonurgent tasks may take a back seat to other core business functions and responsibilities. However, managing company finances is arguably the most important role in any small business. Though it might seem like a minor change, opening a business bank account for your company means taking a major step that can benefit it for years to come.
While some small businesses aren’t required to have a separate bank account to manage company finances, a business bank account offers benefits that practically any small business can use. Whether your business is very new or you’re ready to expand, read on to learn about six ways a business bank account can help grow your business.
1. It Makes Managing Your Company’s Finances Easier
Opening a business bank account helps you officially separate your business expenses, income and assets from your personal finances. Business bank accounts also make it easier to track business expenses and revenue in one central place. Most business bank accounts offer a number of features that can help small businesses save time while managing company finances, including:
- Online and/or smartphone apps: You can access your business bank account and manage finances with online or app-based portals.
- Additional authorized users: As your business grows, you can designate trusted employees to handle financial tasks on your behalf.
- Expense and income reports: While it depends on the specific bank account features, some allow users to easily generate simple charts and reports.
- Integration with business software: Small business owners can save time through easy bank account integration with other business services, including accounting software.
- Financial task automation: Save time by automating recurring payments, bills and other financial tasks.
2. It Can Help You Establish a Relationship With a Bank
Though your business may not require many financial services now, your needs may change later down the line. Opening a business bank account can help your company establish a relationship with a bank. While services vary, many small business banking institutions offer a variety of business services, including cash handling management, asset management and small business loans. Though small business bank loans typically have lengthy application requirements, small business loans are available from a variety of other sources, including online lenders.
3. It Can Help You Establish Business Credit
Generally, a business bank account is required to open a business credit file with major business reporting agencies, including Dun & Bradstreet, Experian and Equifax. Similar to personal credit reporting institutions, business credit reporting agencies use payment information to establish credit history and calculate business credit scores.
While it may take a while to build business credit, a good score is a worthwhile investment with several benefits. Good business credit can help you secure more favorable financing offers, make it easier to qualify for a loan and give your company a solid reputation.
4. It Can Help You Qualify for a Loan
Although your small business may not need to borrow capital now, a business loan or line of credit may be necessary for business expansion later in the future. While business lenders may have different funding requirements, they generally require a business bank account in order to verify application details and/or issue funds to approved applicants.
5. It Make Your Company Look More Professional
A business bank account allows you to directly issue payments and write checks in your company’s name. Without a business bank account, small business owners may need to ask customers to write checks directly to them and send payments with personal checks.
6. It Can Offer Additional Helpful Perks
While actual benefits vary by financial institution, many business bank accounts include special features and perks that can benefit small business owners:
- Account alerts: Set up account alerts to stay on top of real-time financial activity like transfers, payments and account balance information.
- Increased transfer limits: While specific limits vary by type of account and financial institution, most business bank accounts offer higher transaction limits when compared to personal bank accounts.
- Debit/payment card: Some banks offer business checking account payment cards for day-to-day business expenses.
The information in this article is provided for educational and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. The information in this article is not intended to be and does not constitute financial, legal or any other advice. The information in this article is general in nature and is not specific to you the user or anyone else.