5 Ways Your Small Business Can Benefit From a Business Account

If you’re a small business owner, you probably know about the existence of business accounts. What you might not know, though, is whether a business account will benefit your small business. After all, business accounts don’t seem that different from personal checking and savings accounts, and your small business might not have many transactions each month, especially if you’re just getting started. Does a business account actually provide your small business with any benefit?

The truth is that a business account offers several benefits for a business of any size, and a small business is no exception.

Business Accounts Make Tracking Expenses Easier

The most obvious benefit of having a business account is that you can track how much you’re spending on business expenses. This is extremely important, since your business expenses will affect how much you owe or get back when you fill out your tax return. It will also help you manage employees by figuring out who spend what. 

If you use your personal checking account to keep track of businesses, you’ll have to search through it constantly to sort out your business expenses from your personal one. That not only requires time that you could better spend elsewhere, but it also increases the chance you’ll overlook an important business expense. 

Business Accounts Can Limit Personal Liability

If your small business is a Limited Liability Corporation (LLC), you’ll want to have a business account to prove that your business assets are separate from your personal assets. If you use a personal banking account for your expenses, you risk losing the protection an LLC provides and be found personally liable for your business’s debts.

Business Accounts Give You More Credibility With Customers

In the world of business, image counts for a lot. If you’re using your personal checking account for business purposes, you give your customers the impression that you’re not serious about your business.

Having a dedicated business account, though, makes you look like the competent professional you are, and that you’re serious about your business. This can be an important factor in getting new customers, especially by referral, and it will become even more important as your small business starts to grow.

A Business Account Proves to the IRS you Have a Business

In addition to convincing your customers that you have a real business, you’ll also need to convince the IRS, which has nine factors they use to determine if your business is actually a business or merely a hobby. The first factor they list is “Whether you carry on the activity in a businesslike manner and maintain complete and accurate books and records.” Keeping a separate business account is one of the best ways to meet this requirement, and it can also help you show the IRS that you meet other requirements, like being able to make a profit with your business.

A Business Account Helps Establish Business Credit

As your small business starts to grow, you might find yourself needing to take out a business loan, set up a business line of credit, or even get a business credit card. If you have a preexisting business account, you’ll be able to show the lending advisor that you’re running a profitable business, which will increase the odds of you getting the loan, line of credit or credit card. You should also know that in many cases, you’ll either need to have a business banking account to be considered at all or you’ll have to open a business banking account in order to be approved.

Watch the Video: Managing Small Business Finances

Get a Business Account for Your Small Business at First Alliance Credit Union

No matter what size your business is, it will benefit from a business banking account. It let people know you’re a professional who is serious about their business, and perhaps even more importantly, it will help convince the IRS. It’s also a necessity if you plan to apply for a business loan, line of credit or credit card.

If you’d like to get a business account for your small business, become a member of First Alliance Credit Union today. We offer several different business accounts with straightforward terms, as well as a commercial line of credit that can give you access to short-term funds when you need them.

Open a Credit Union Business Checking Account Online Today!