It may be tempting to put off opening a business bank account when you have gone through all of the trouble and steps to do so. After all, there are so many other critical tasks to the operation that it’s okay to ignore this one, right? Wrong! Opening a business account can help you in unexpected ways, such as simplifying your accounting and establishing your company’s credit history to make it easier to get a loan. Here are four important reasons to open a business bank account that you should think about. Click here for online banking account creation malaysia.
- Makes tax preparation easier
- Having a bank account facilitates tax preparation. Because you or your accountant can link your business bank account transactions with tax preparation software, it is much easier if all of your business income and expenses flow through your bank account. That way, whether you hire a tax preparer or do it yourself, you’ll save yourself countless hours and headaches when it comes time to sort through your finances come tax season.
- You won’t have to figure out which expenses are personal and which can be attributed to your business if you have a business bank account. This almost makes tax deductions a pleasurable experience. In addition, if you or your company is ever audited by the IRS, you will be protected.
- Automate your bookkeeping
- Bookkeeping software can help you manage your business’s finances by assisting you with bill paying, accounting, budgeting, and invoicing. You can sync your bank account with your bookkeeping software if you have a business bank account that separates your personal and business finances. Essentially, this automates almost all of your bookkeeping!
- With your bookkeeping software automatically synced to all of your business bank account transactions, you can assess the health of your business by simply assessing your cash flow, income, and expenses monthly or quarterly, without personal transactions muddying the numbers.
- Protect yourself from business debt liability
- One benefit of forming your company as a corporation or a limited liability company (LLC) is that if your company is unable to pay a debt, the creditor cannot legally seize your personal assets unless you did something to incur liability, such as breaking the law. However, if you mix your business assets with your personal assets, such as not maintaining a separate business bank account, your liability protection is essentially non-existent. This means that a judge may hold you personally liable for any business debts you incur. Depending on the circumstances, you could lose everything you own. This isn’t a fun reason to open a business bank account, but it’s an important one to think about.
- Establish business credit
- You can establish a credit relationship with a local bank by opening a business account. Lenders will consider a company’s credit history when deciding whether or not to lend it money. A favorable business credit history can help you get a loan with a reasonable interest rate if you want to finance equipment, hire more employees, move to a larger space, or expand your business in other ways.