Setting up a business bank account is really important for handling your business money well. It gives you a special place to take care of your business cash, deals, and spending. This helps to keep your own money separate from your business money.
Having a separate bank account for your business has some cool advantages:
■ Easy bookkeeping: With a business bank account, it’s simpler to keep track of your business money separately from your personal money. This makes it easy when dealing with financial statements, taxes, or getting a loan.
■ Professional look: Having a business bank account makes you look more professional and trustworthy. It shows you’re serious about your business and handling your money responsibly.
■ Payments made easy: You can smoothly handle payments from customers and pay your suppliers with a business bank account. Whether it’s checks, electronic transfers, or credit card payments, it helps keep your money flow in check.
■ Access to extra services: A business bank account gives you access to cool stuff like credit cards, credit lines, and loans. These can be handy for managing money, growing your business, and supporting its expansion.
The legal and tax consequences of mixing personal and business funds.
Mixing your personal and business money can cause problems. If someone sues your business, your personal stuff might be in danger. Also, it can be hard to figure out business expenses for taxes, which could mean making mistakes and getting fines.
A business bank account helps you handle money and track how your business is doing financially.
A business bank account is like a helpful tool to handle your money for your business. It helps you keep track of how much money is coming in and going out, manage what you spend, and keep your accounts in order.
You can also use it to make a plan for how you want to use your money and see how well your business is doing. This way, you can make smart choices, find ways to do better, and make plans for your business to grow.
Plus, it gives you all the info you need for things like getting a loan, doing your taxes, and understanding how your business is doing financially.
1. Selecting the Correct Bank
Picking the right bank for your business account is super important. Here’s what to think about:
■ Fees: Find a bank with low or no fees for business accounts, like monthly fees, transaction fees, and ATM fees.
■ Services: Check what services the bank offers, like online and mobile banking, and tools for managing cash.
■ Customer service: Go for a bank with really good customer service – they should be easy to reach and quick to help.
■ Location: See if the bank has branches near your business or if you can access it online or through a mobile app.
■ Reputation: Look into the bank’s reputation and history. It’s good to pick one with a strong track record and positive reviews.
2. Bank Account Types for Businesses
A business checking account is like a simple toolbox for businesses. It lets them put money in, take money out, write checks, and do electronic payments.
It’s a bit different from personal accounts – more transactions allowed, but also some fees. The cool part is, it comes with special tools for businesses, like handling cash and doing online banking.
Accounts for Business Savings
Business savings accounts are like piggy banks for businesses. They help save money and even earn extra money called interest.
These accounts don’t allow as many transactions as checking accounts, but they give more interest. They’re great for businesses to build up their savings.
Accounts for Merchants
Businesses use merchant accounts to take credit and debit card payments. These accounts are provided by companies that handle payments. You can set up a merchant account along with your business checking account. They might have higher fees, but they’re crucial if you want to accept electronic payments.
Cash Management Accounts
Money market accounts are like savings accounts but with better interest rates and easier access to your money. They’re great for businesses that want to earn interest on their deposits while still being able to get to their money easily.
Accounts with Certificates of Deposit (CD)
A Certificate of Deposit (CD) account is like a special savings account for businesses. You put a certain amount of money in for a specific time, like a few months to a few years. In return, you get more interest than a regular savings account. But if you take out the money early, there can be penalties.
Line of Credit
A credit line is a helpful way for businesses to borrow money up to a set limit. They can use the money when needed and only pay interest on what they borrow. Businesses often use credit lines to handle cash flow or cover short-term costs like buying inventory or paying employees.
3. Items Required to Create a Business Bank Account
When you want to open a business bank account, you usually need to give these things:
■ Business name and address
■ Business Identification Number (BIN) or Tax ID Number (TIN)
■ Type of business and how it’s legally set up
■ Documents showing your business is registered, like Articles of Incorporation or a Partnership Agreement
■ IDs (like driver’s licenses or passports) for everyone who can sign for the business
■ Any licenses or permits your business needs, if it has any.
You might also have to share details about your business money history, like how much you earned or paid in taxes. Make sure to check what your bank needs, so you have all the right papers and info.
Various Kinds of Business Entities and Their Special Needs
Various kinds of businesses need different things when they want to open a bank account. Here’s a quick look:
1. For businesses owned by one person (like a sole proprietorship) or by a few people (like a partnership): You usually need the owner’s or partners’ personal ID and Social Security Number (SSN).
2. For businesses like Limited Liability Companies (LLCs) or corporations: You need special business papers, like Articles of Organization or Incorporation. Also, you’ll need an EIN or TIN.
Remember, it’s smart to check what your specific business needs before getting a bank account.
Register your business with the government and get the permits and licenses you need.
To make your business official and get the right permissions, you need to do a few things. The steps might change based on what kind of business you have and where you are. Here are some things you might have to do:
■ Tell your state government about your business.
■ Get a special number from the IRS (like a secret code for your business). It’s called EIN or TIN.
■ Get any papers or permissions you need from your local government or other groups that control businesses.
■ Make sure you have all the licenses or permits you need from your local government or the groups that watch over businesses.
Check what your specific type of business needs in your area. Talk to a lawyer or an accountant to make sure you do all the right things to start your business.
4. Managing a Bank Account for Business
To use your business bank account every day, you need to do a few important things. Put the money your business earns into the account, pay your bills and expenses, move money between accounts if needed, and check your account balance regularly to make sure you have enough money.
It’s really important to write down all the things you do with your money and choose specific people who can sign on the account.
Checking your business’s money and how it’s doing is important. It lets you make smart choices about your business cash and see how well it’s doing over time. Also, keeping an eye on your business savings account can help you catch any problems early, which is good because it saves you time and money in the end.
Smart Ways to Handle Money Flow and Keep an Eye on Account Actions.
To make sure your monthly money records are right, follow these steps:
1. Look at your bank statement and check it with your money records. Find any differences.
2. Make sure all the things you bought or got money for are written down correctly in your money records.
3. If you find any mistakes, figure out what went wrong and fix it.
4. Change the amount of money you have in your records so it’s the same as the amount in your bank statement.
Doing this regularly helps stop mistakes and find problems early.
Knowing about overdraft fees and other possible charges.
Fees like overdraft charges can hurt your business money. To prevent surprise payments, understand the bank rules about fees.
Always have enough money in your account to cover costs and avoid overdraft fees. Setting up protection, like a credit line or linked savings account, can help keep your account from going negative. Also, check your account statements often to catch any wrong charges.
Tips for handling money flow and keeping an eye on account activity.
To make sure your monthly bank transactions are correct, follow these steps:
1. Check your bank statement against your records and find any mistakes.
2. Confirm all transactions are correctly written in your records.
3. Fix any mistakes you find.
4. Adjust your recorded cash to match the bank statement
Checking your bank statements regularly helps catch mistakes early on.
5. Business Online Banking
Business online banking is great because it helps make money matters easier and faster. You can check your account and do transactions from anywhere, anytime. This saves time and resources by not needing to go to the bank in person.
It also makes transactions quicker and safer, like electronic funds transfer and automatic bill payments. This helps businesses avoid late fees and mistakes. Online banking often comes with tools to track cash, expenses, and make smart financial choices.
Features to Look Out for in Online Banking
When picking an online bank for your business, check for important things. Like seeing how much money is in your account, looking at your transactions, moving money between accounts, and paying bills online. Some platforms also have cool extras, like banking on your phone, depositing checks from far away, and making custom reports.
Thinking about how safe an online bank is matters. Look for things like extra security steps, secret codes, and tools that catch tricky stuff. These things can keep your business money info safe and stop anyone who shouldn’t be getting in.
Using online banking might cost some money. Like, there could be a monthly fee, a maintenance fee, a fee for transactions, or even a fee for using ATMs.
Make sure to check and compare these fees and what each platform offers. That way, you can find the one that works best for your business and how much money you have.
6. Top Banks for Start-ups
Picking the right bank for your small business has lots of choices. Big banks like Chase, Wells Fargo, Bank of America, and Capital One have special services for small businesses. And there are also smaller local banks and credit unions that focus on helping small businesses.
Things to Think About When Picking the Right Bank for Your Small Business.
When picking the best bank for your small business, think about some important things. Check out the fees, what the account can do, how easy it is to use, how good the customer service is, and what people say about the bank.
For instance, you should find a bank that doesn’t charge a lot for small business accounts and has things like online banking and mobile check deposit that are useful for small businesses.
It’s also good if the bank is easy to get to, especially if you need to go there to put money in or talk to someone. Lastly, choose a bank that is known for being helpful and friendly to small businesses.
7. Business Cards with Revenue and Credit
The Revenued Business Card is like a special card for businesses. It’s not a credit card, but it lets you use money you’ll get in the future.
You can use it to buy things in a store or online, just like a regular business credit card. Instead of checking your credit score, they look at how much money your business makes. This makes it good for businesses with not-so-great credit.
This card is great for small businesses with a short credit history or okay credit. You get a $500 bonus if you spend $5,000 in the first three months. You also get 3% cashback on your purchases, and there are no setup, monthly, or yearly fees. But, be careful, because it might end up costing more than a regular credit card.
It’s easy to apply for the Revenued Business Card online. You can get approved in just an hour, and you’ll have access to your card and money in 24 hours. They decide based on how much money your business makes, so it doesn’t hurt your credit score.
To get this card, your business needs to be in the U.S. for at least six months, have a business account with at least $15,000 in deposits each month, and never have your account in the negative for more than three days in a month.
Using the Revenued Business Card to Boost Your Business Credit Score
Using a business card can help your company grow and reach goals. For instance, getting a card for buying new things can boost productivity and money earned.
Also, using it for business expenses helps keep track and build credit. It’s crucial to use the card responsibly and have a plan for getting receipts on time. Before getting any kind of debt, businesses should think about the costs and benefits.
The Revenued Card isn’t a loan but helps your SBFE business credit score. Revenued reports your good performance with the card to credit bureaus. SBFE is used by Dun and Bradstreet for business credit reporting.
If you don’t have a business credit profile, Revenued can guide you on registering with Dun & Bradstreet for a free business credit report. As a Revenued account holder, you can check your SBFE score anytime through the Revenued app and online dashboard.
