Does My Business Need Its Own Bank Account?
As a business owner, you’ve probably heard people talk about the importance of having a business bank account.
But maybe you think you don’t need one yet. There are several reasons people feel that way, some of which include:
I’m just a sole proprietor.
I’m only freelancing part time.
My business is just a side hustle right now.
My business is too small to need a business account.
Getting a business bank account seems too complicated.
I’m not legally obligated to get one.
All due respect, none of those reasons are valid.
Whether your business is a multi-member LLC or a sole proprietorship, or whether your business is just a side hustle or your full-time gig—it needs its own bank account.
Why a Business Checking Account Is So Important
A separate account makes tax reporting much simpler because it helps you keep better track of your business expenses and income.
When you have a separate account, all you have to do is integrate it with your online accounting software. Then, your accounting software will keep track of every expense and every deposit, making financial reports much easier to create and save.
Lastly, a separate account offers you better legal protection. If you have an LLC, keeping your business account separate from your personal account offers stronger protection if someone tries to sue you and go after your personal assets. Keeping those finances completely separate shows the courts that your business is truly operating as a business instead of as a direct extension of you.
When to Open an Account for Your Business
As soon as your business begins accepting money (or as soon as you get your EIN), it’s time to open a separate account.
If that ship has already sailed for you, then don’t fret—now is as good a time as any to do it.
Best Business Bank Accounts for Small Businesses
Another reason many business owners don’t open a separate account is that they don’t know which bank to go with. They get overwhelmed with all the options!
It’s true that there are plenty of great options out there for small businesses. But here are a few to help narrow down your list:
1. Chase Bank.
You get 250 free transactions each month, unlimited electronic deposits, and unlimited incoming wires. Plus, their business credit card options have excellent benefits. And as long as you maintain $2,000 in the account, they waive their $15 monthly service fee. Their app makes managing your account online fairly easy.
The last benefit is that the bank is so widespread that, no matter where you go, you’ll always have a brick-and-mortar location nearby.
2. Wells Fargo
One nice thing about Wells Fargo is that they’re one of the largest SBA lenders in the entire country. Not to mention, they offer a wide variety of business accounts, depending on what stage your company is in.
3. Bank of America
Like Chase, their popularity means tons of physical locations around the country. They also have many account options to choose from. When you open an account with them, you get access to a host of digital tools, specialists, and rewards.
4. Axos Bank
If you only need online banking, Axos Bank may be great match for you, especially if you’re looking for a $0 monthly maintenance fee. Their savings accounts offer some enticing interest rates compared to some of the bigger players.
Also, if you launched your business after June 1, 2020, they have a $100 bonus when you open an account with them.
5. Navy Federal Credit Union
If you want to go with a credit union, this bank is a good choice for your small business. They offer checking and savings, loans, credit cards, payment processing, retirement options, and even insurance.
If you need help managing your bookkeeping, click here to learn how we can help you!