For many new and veteran business owners, keeping business finances separate from personal finances can be the most effective way to manage cash flow. Having a business account not only makes it easy to separate financial records for IRS purposes, but it also helps to offset business expenses like travel costs and phone calls against your income.
Business accounts work similarly to personal checking accounts, where you’re able to set up payments, make debit card transactions and receive payments. A business checking account can also help:
Establish a credit score for your business. You may need to apply for a business loan or credit card in the future, and having an account for your business can help build credit. Keeping your business expenses under a personal account could make you ineligible for business products when it comes time to apply.
Save time on tax returns. When your business income and expenses are tied to a dedicated account, the information you need is all together, and the time it takes to sift through different accounts diminishes.
Other important reasons for opening a business account
Metrics of success. When you have a business checking account you can see how well your business is doing in terms of profitability. You can also handle costs versus revenue much easier.
Legal protection. Business owners cannot be sued personally in relation to business-related issues, provided they maintain the corporation as a wholly separate entity. If you compromise this protection by paying a contractor from a personal checking account, the protection between your business and personal assets could deteriorate. Read more on asset protection for business owners.
A professional reputation. When conducting business with vendors, customers or other associates, your business will appear more legitimate when transactions come from a business account, rather than a personal account.
No matter how big or small your business is, having a business account will help with all your financial records. To help produce stable, long-term growth, your business account can save you time and keep things running smoothly.
Visit u1cu.org/business-accounts to learn more about business accounts at Universal 1 Credit Union.
Universal 1 Credit Union (U1CU) supports local businesses with essential checking and savings accounts. To get started and learn what’s needed, contact U1 Member Support at (800) 543-5000 option 0 or email memberservices@u1cu.org. Member support is available from Monday to Friday from 9 a.m. to 5 p.m. and on Saturdays from 9 a.m. to 12 p.m.