Are you tired of using your personal bank account for your business? Opening a business bank account is generally easy. Plus, your small business accounting system will also see benefits. Read on to learn about five advantages of opening a business bank account.
Business Bank Account Benefits for Small Business Owners
Distinguish the business from a hobby
Make sure your venture is a legitimate business instead of a hobby. Otherwise, you’ll be deprived of many tax deductions that only businesses can take.
The general definition of a business in the eyes of Uncle Sam is a venture whose primary motive is to seek profit. A business bank account helps bolster the legitimacy of your business. Even if you’re not profitable, this is a strong signal that you intend to be eventually.
Separate business and personal transactions
Opening a business bank account can improve your current business accounting system. When you co-mingle personal and business transactions, you risk poor record keeping. Even worse, you may increase your risk of an audit due to inaccurate business deductions.
A business bank account acts as a barrier between business and personal transactions. This will boost the accuracy of your business accounting, as well as your annual tax return.
Process card payments
Does your business only accept payment for products or services in the form of cash or checks? A business bank account can help you accept credit cards. Accepting debit and credit cards opens your business up to more customers.
Maximize business deductions
Small business owners often overlook many deductions at tax time. Knowing your business-only financial activities allow you to better spot potential deductions. A business bank account helps you achieve that. With a consolidated log of business expenses on hand, you can identify and claim the deductions you deserve.
A business bank account can help you present a more professional image in the form of branded checks. Sure, you can also do this with a business website and cards but this adds even more credibility. You can customize your checks with your business name and your logo to strengthen your brand identity. This can convey that you’re a viable and reputable merchant.
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MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.