Why Businesses Should Have a Separate Business Account

Operating a business requires a great deal of financial organization. However, many business owners use their personal accounts to conduct sensitive transactions, which can lead to problems in the future. Here are some benefits of separate checking accounts for small businesses. Plus, if you’re just getting started, learn how to open a business checking account for your important business financial needs.

Legal and Liability Protection

While keeping business finances in your personal accounts may seem convenient, it could open up unprecedented legal risks. For one, you may be held personally liable when it comes to creditors. Since there is no legal separation between your personal and business assets, they may be used to cover any legal issues from your personal accounts. Having separate accounts can create and maintain a clear legal boundary.

Accurate Bookkeeping and Tax Preparation

Tax season can be burdensome for business owners. To prevent further issues, separate checking accounts can help distinguish business expenses from personal spending. This helps prevent mistakes when filing, which opens your business up to potential audits.

Professionalism, Credibility, and Trust

If your business regularly operates with vendors and other clientele, having a dedicated business checking account sends a clear message that you’re committed and organized. Also, customers can see your business as more legitimate, which in turn creates a professional brand image, leading to more recognition and growth.

Access to Business Banking Tools

While some personal checking accounts have benefits, they differ from business checking accounts. One of the benefits of separate checking accounts for small businesses is access to certain business banking tools. These can include tools to help you build your business credit score, lines of credit, or business credit cards to scale your long-term growth.

How to Open a Business Checking Account

To open a business checking account, you typically need the following documentation:

• Business tax ID/Employer Identification Number (EIN)
• Business formation documents (LLC, corporation, state registration, etc.)
• Ownership agreements
• Personal identification

You can often open accounts online, but some may require an in-person visit to sign any relevant documents.

Once you have all this information ready, make sure to look for accounts with great features to help keep track of your business expenses.

Cyprus Credit Union’s Business Services offers business checking accounts to take your business further. With fewer fees and great benefits like earning dividends or overdraft protection, you can keep your business expenses in check at every step of your journey. Learn more about the business checking accounts we offer here. You also get a dedicated Business Banking Officer to assist you with anything your business needs. Work with Cyprus Credit Union to see how you can grow.