It does not matter if you have a side hustle you pursue in your spare time or run a business that takes up all of your time - if you do not have a separate bank account for your business earnings you are selling yourself short. Worse yet, not having a bank account dedicated to your business could put you and your financial future at risk.
Mixing together income and expenses from your business and personal expenditures and earnings can be confusing, especially when tax time rolls around. If you get it wrong, you could be on the wrong side of an enforcement action by the IRS, but it all could have been avoided by opening a single account.
Knowing that you need a bank account for your business is one thing, but understanding what to look for in such an account is quite another. If you want to get the most out of the bank account you open, here are some key things to look for.
Low (or No) Fees
Many people think that opening a business bank account means paying high maintenance fees, and the fear of those expenses has caused many a business owner to hesitate. The good news is you do not have to pay high fees to open a business bank account, and in many cases you can get one for no cost at all.
You may need to do some sleuthing to find one, but if you are willing to put in the work you should be able to find a business bank account that does not charge any fees. Even if you cannot find a totally free business bank account, you should be able to find one with reasonably low costs attached.
Individualized Attention
One of the most important advantages of having a business bank account is the access it gives you. It is one thing to have an individual account, but owning a business puts you in an entirely different category.
If you want to make the most of that individualized attention, look for a bank that caters to the business community. A business oriented bank may also have access to additional products and services, another important benefit and another reason to use that financial institution for all your banking needs.
Access to Loans, Grants and Other Support
From low-interest loans through the Small Business Administration to mentoring classes at local community colleges to emergency grants designed to keep small businesses afloat, you have access to more resources than you realize. A good business banker will know where to look for that assistance, and what you need to do to qualify.
When opening a business bank account it is worthwhile to ask about the level of support customers can expect. Even if you do not need a loan now, you never know when you might benefit from access to financial capital, and having that support system in place will make the process that much easier.
A Reasonable Return on Your Money
If all goes well with your side hustle or your small business, you will soon have large amounts of money flowing through your new bank account. You worked hard to earn that money, and now it is time for your money to pay you back.
You have a right to expect, and demand, a reasonable return on the money you are putting on deposit. The bank is providing a valuable service in opening the account, but they are also receiving value from the funds. A competitive rate of interest is your right as a business banking customer, and you should not settle for anything less.
Detailed Reporting
One of the biggest benefits of having a separate bank account for your business is that host of tax benefits it can provide. Instead of mixing and matching your personal and business income and expenses, you can easily keep them separate by opening an additional bank account.
You can increase that value even more by seeking out a business bank account that includes a robust reporting structure. Some business bank accounts, for instance, offer free year end reports detailing income, expenses and other vital information, while others provide access to user-generated reports. This reporting structure will make tax time easier, even if it does not make it any less expensive.
If you do not yet have a separate bank account for your business you could be missing out on some very important benefits. Even if your business is not incorporated, you can still benefit from a business bank account, especially if you can find one with the features and benefits outlined above.