Hey, Girl! Get a Biz Bank Account!
Does your business have a separate bank account?
It's a detail so small, you may have overlooked it. But it’s actually a BIG step in setting up your business legally...along with EINs, LLCs, etc.
Setting up your company legally is so important because it can reduce your taxes and prevent you from paying business debts with your personal assets (a big no-no)
But bottom line: you need a business bank account!
Reason #1. $$
It's going to save you when it comes to taxes. It makes your life so much easier to keep all business income + expenses in one place.
Plus, if you get audited, the fact that you have a separate business account can prove that your business is real. You'd be surprised how many people create sham businesses for the tax breaks. This is huge because if the IRS determines that your business isn't real, then you don't get to claim all those lovely tax deductions. And that means you'll pay a lot more in taxes. So make things easy on yourself and set up a separate account.
Reason #2. Keep Your Limited Liability
You may have heard about limited liability. It's what happens when you register an LLC or C Corp. It means only your company's assets are at risk. You won't have to use personal assets, like your house, car, or bank account, to pay business debts, like a lawsuit, tax penalty, or contract. So it's obviously super important.
To keep limited liability, you have to use a business bank account. And you have to keep your business assets and personal assets separate. That means separate records and separate accounts. If you mix your accounts, like putting website sales into your personal account or paying your home electric bill from your business account, you're going to lose your limited liability. And that means your personal assets are at risk.
Stay on the safe side and keep your money separate.
How to get a business bank account
The good news is that it's as easy as it sounds. You can take your state paperwork to the bank to get started. Try a local bank or credit union. The managers are typically more invested in the local economy and can tip you off to favorable business loans, community events, and partnerships.
What type of account to open
Look at the number of monthly transactions for your current account beforehand. Many business accounts have minimum or maximum deposit or transaction thresholds that you have to meet to avoid penalties.