When starting out, many business owners use their personal bank accounts to accept and spend money for their business. While it may, at first, seem more convenient to stick to your banking status quo, mixing these two accounts could cause some headaches in the long run. Opening a business account comes with a number of benefits. It can help you lay the groundwork for long-term financial wellbeing — keeping you legally compliant and helping you appear more professional to customers and vendors. Plus, having one account for the sole purpose of collecting from customers and paying your vendors makes it easier to log transactions and manage your business. Consider these additional reasons to have a dedicated bank account for your business.

Certain business structures require it

Any business operating as a separate legal entity from the owner is required to have a bank account dedicated to business transactions. That typically means that if your business is operating as a limited liability company (LLC), limited liability partnership (LLP) or a corporation, you’ll need to open that account with your IRS-issued Employer Identification Number (EIN). To open the account, you also may need to show other documents, such as a business license and trade name paperwork.

It allows you to accept credit card payments

For many business owners, the ability to more easily accept credit card payments is the single biggest reason to open a business bank account. A personal bank account can’t accept credit card payments without the use of a payment service provider. Business bank accounts, on the other hand, are set up with these transactions in mind. Though this built-in feature could mean that having a business bank account is accompanied by more fees than a personal account, that tradeoff may be worth the benefit of capturing payments in a way that’s most convenient for your customers.

Doing so can help you prepare for growth

For some business owners, opening a business bank account is the first step in what could be a prosperous relationship between your business and a financial institution. It sets the foundation for building your business's credit, which is helpful should you need financing down the road to fund growth in services or expansion in operations. Plus, when the time comes to learn about your options for a business line of credit or business loan, you’ll be able to take those exploratory steps with a financial institution you’ve come to trust — and one that is used to working with your business. And even if you don’t have any employees now, getting a business bank account established early helps lay the financial groundwork for taking on that system when you’re ready.

Tax preparation is made easier

From a tax perspective, having a business bank account simplifies the process of paying quarterly business taxes. The federal government stipulates that most individuals who own their own business must pay estimated tax four times each year. Having all your business’s income and expenses cataloged in one place makes calculating these estimates a much simpler and more straightforward process. Plus, keep in mind that should you receive a tax audit and don’t maintain a separate business bank account, your personal transactions may be subject to scrutiny.

It helps with liability and identity protection

It’s true that registering your business as an LLC or corporation can offer some personal liability protection. However, if you don’t separate your finances from those of your business, your personal assets could still be vulnerable. If your business should endure a lawsuit and your personal finances are mingled in with your business finances, someone could claim that they are not, in fact, separate entities. Opening a dedicated business bank account can also help keep your personal identity safe. Since you use an Employer Identification Number (EIN) instead of your Social Security Number to open the account, it reduces the possibility of your personal information being exposed in case of a cyberattack targeting your business. This is especially important if your business makes a large number of transactions, which could make it a more attractive target for fraudsters.

Open a business account today

Speak with a Chase business banker to see how opening a business bank account can help you take your business to the next level.

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