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Do you need a separate business banking account?

On Behalf of | Dec 17, 2020 | Banking & Business Transactions |

Starting a new business is exciting, but it also means that you’ll have a lot to do. One of the things that should be on your list is to set up a specific bank account for your business. Why? There are a few reasons.

Before you commingle your funds with your personal assets, it’s time to look into business banking. It helps by separating your business funds, creating a special account for taxes and keeps track of all your business transactions. Here is more on why a business account is so vital.

Separating your personal and business assets

One of the most important reasons for having a business account is because you are going to want to keep your money separated. If you want, you can pay yourself from your bank account, but you should never use it as if it’s a personal account. This keeps the money easier to track.

Easier tracking for taxes

Speaking of tracking your money, the next reason to maintain a separate account is because of taxes. For at least the first year of operating your business, you’ll want to set aside taxes in a separate account, so you have all you need to pay the Internal Revenue Service in April (or during quarterly installments).

Keeping track of transactions

Finally, keeping track of transactions is easier with a separate account. You’ll see which transactions are related to your business immediately for the purposes of seeing how much you spent on your business (and how much you can deduct in expenses on your taxes).

These are three reasons to have a separate bank account for your business. It’s the normal thing to do with a business, and it makes your life simpler.

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