April 15, 2024

5 Reasons Why Small Businesses Should Have a Business Checking Account

5 Reasons Why Small Businesses Should Have a Business Checking Account

The banking industry isn’t the same as it was even a decade ago. Traditional brick-and-mortar banks are being replaced by online banks that have streamlined their services and offer lower fees for customers who meet certain criteria.

 In this digital age, small businesses no longer have to settle for accounts that don’t fit their financial needs. Businesses of all sizes can find an affordable checking account tailored to their specific business requirements

Enjoy the Advantages of a Business Checking Account

Given the endless paperwork and accounting hoop-jumping that comes with running a small business, you might think there are no simple ways to streamline your operations. However, you’ll soon find out that securing a business checking account offers major benefits.

1. Earn Interest on Your Cash Reserve

If you carry larger balances and work as a sole proprietor or have set up an LLC, it’s important to scale your business for growth. Therefore, choosing the right checking account will give you this benefit. Checking accounts for businesses today provide no minimum balance requirements and offer a low or zero monthly maintenance fee. If you sign up for an interest bearing account, you can also earn interest on the cash reserve in your account.

Before signing up for the account, check with an accountant first. Remember that the interest you earn is also considered as ordinary income for tax purposes. However, if you’re not assessed a minimum balance and have a low maintenance fee, earning interest is still an attractive feature.

2. Keep Your Risks Low with Fraud Protection

When you open a business checking account, you can also protect yourself against fraudulent consumer purchases. A bank can detect fraudulent credit card purchases more quickly when they’re run through a business account. 

Therefore, the credit card that is featured with a business banking account is a better option than using a regular credit card that is separate from the account. All checking account transactions are secured through the highest form of cybersecurity technologies.

3. Run Your Customer Transactions Through a Separate Account

By having a business checking account, you can separate your personal checking and business banking account information. This is important for accounting, budgeting, and tax purposes. Having business transactions part of a personal checking account can lead to questions about your financial operations and possible lawsuits. Therefore, it’s essential that you separate your business activities from what you pay personally for purchases.

4. Pay Your Employees with Streamlined Efficiency

If your business has more than one employee, you’ve probably pondered the question of how to pay your team members’ salaries. This can be especially challenging if you’re operating as a sole proprietorship or partnership. 

You can avoid many headaches by paying employees through a separate account. If you run payroll through your business checking account, you can use online banking to send each employee a payroll deposit through the account.

5. A Better Way to Balance the Books

When you focus on business transactions, you only want to use one account. That way, you can set up your bookkeeping schedule so you know just how much your business is receiving and paying out. If you want to balance the books and continue to grow, you need to rely on a checking account designed for your business.

Keep Your Financial Operations Running Smoothing

As a small business owner, you know it’s important to keep your financial operations running smoothly. That’s where a business checking account comes in handy. Today, you can find one that is well-suited to your company’s operational needs. To gain a competitive edge and keep track of what you earn, having a checking account for your business is a necessity.

Avatar for Radhe Gupta

Radhe Gupta

Hello, I am Radhe. I am absolutely in love with writing and by working with News Whizz, I have developed a passion for it. It helps me to stay updated and know what is happening around the globe.

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