When operating a business, it’s important to appear as professional as possible in all areas, including the financial part. For that reason, most businesses open a separate checking account for their business to maintain not only a professional appearance, but to also keep personal and business finances free from one another. In addition, there are many other reasons to not use your personal checking account for business purposes.
Image is Everything
Using a personal checking account for business purposes makes it appear as though the owner does not take the business seriously enough to establish a separate account. On a business account, an owner can use his Doing Business As name rather than his personal name. Because some personal accounts are joint accounts, the checks used for business would have spouse’s names on them, as well as the home address and possibly phone number. It’s considered far more professional to send checks with a business name on them, and they also allow an owner to request payments with the business name on them. Using cheap personal checks with silly designs will be a quick way to becoming a laughingstock with new and established customers.
Using a business account that’s separate from a personal account makes it easier to manage the company’s finances. Having a business account will allow an owner to pull up a year-end report to review charges and deposits without having to sort through a bunch of personal transactions.
Analyzing Business Trends
Using a business checking account will allow an owner to gain a better understanding of business trends and how the company is spending money. Being able to compile financial statements quickly and accurately will save an owner not only time but money.
One area that often gets mixed-up when using personal checking accounts for business purposes is the information needed to open both types of accounts. Personal accounts require only an ID and social security card, while a business account requires a business registration form, fictitious name form and business license. Also, business accounts require a tax ID number and social security number while the personal account needs only a social security number. Using a personal account, then trying to switch to a business account can sometimes result in transactions going to the wrong account.
By taking these steps, any business will have a much greater chance of projecting a professional image while avoiding financial confusion for themselves and their customers.