Why Your Small Business Needs a Separate Bank Account.

Yayyyy! Congratulations on starting your business 👏 . It doesn’t matter if it’s your side hustle or if it’s a big idea you have decided to share with the world, the important thing is that you started. Small business owners around the world make one common mistake, not having a separate account for business.

It is important to have a dedicated bank account for your business – regardless of its size.

Simply put, a business account is used for business transactions and not for personal expenses. A business account is similar to a personal account, the major difference is that you are able to track the progress of your business. As a small business owner who might be in need of finance for your business to grow, you will need access to loan options which can only be provided by data from your business account.  

Here are five reasons why you need to separate your business account from your personal account:

  1. Your customers will trust your business –

As a business owner, you need to be able to win your customer’s trust from the first point of the meeting till the sale happens & ends. How would it feel to lose a customer just because you sent a personal account and they don’t feel comfortable? Not a great feeling right? Asking your customers to transfer money to an account with your business name gives a feeling of authenticity.

2. Access to finance –

Whether you believe it or not, you would need to credit options to scale up and financiers won’t  provide funds if you don’t have a separate account. It screams unserious. Don’t let that be you.

3. Simplify tax  –

Yes. Tax! As a citizen, it is your responsibility to pay tax. With separate bank accounts, it’s simpler to calculate how much tax your business needs to pay. It is also important to note that, when you mix your personal and business expense, your books look bigger than it is. With Simplebks, you can simplify bookkeeping to ease tax payment.

4.  Bookkeeping made easy –

Imagine the hours you get to spend trying to separate business expenses, identify profit, business inflow and others. Having a business account just gives you an overview of your financial projection.

5. Brand positioning-

Yup! Nothing a small business needs than to be seen as a big brand. Having a business account will help your customers appreciate the value of the service you offer/ product you sell.

Final thought –

Different businesses have different financial needs, depending on the goals/projections set. As a business owner, it is important you ask questions and understand what a bank offers before opening a business account.

We advise you to keep your business and personal finances separate. Having a business account to manage your business finances will mean you avoid the issue of mixing up your personal expenditure with your business finances by doing everything via your personal account (and that will save you time when it comes to tax return time).

Bonus tip – Having an accounting software like Simplebks, you won’t ever have to struggle with calculations day in, and day out. You can easily balance sheets like a Pro.  

Accounting Made Easy!  💛

Writer’s Recommendation: Our Getting Started Series For Entrepreneurs https://simplebks.com/blog/tag/getting-started/

Leave a Reply

Your email address will not be published. Required fields are marked *

A more productive, efficient, and faster way to work with your finances.


© 2024 Simplebooks Inc. All Rights Reserved.