Bank accounts are essential for a lot of reasons. As an individual, it qualifies you for an interaction with a financial institution or lender, gives access to your finances and financial record for credit score rating, allows access to financial incentives, and more. While individuals stand to gain a lot from owning a bank account, including security for their money, businesses can also enjoy the same benefits or more. Getting commercial checking accounts from Five Star Bank offers a lot of benefits; however, the question of who can open one is essential. No business owner should think of going into business in this modern-day time without a business checking account. A business checking account is a financial account with a financial institution dedicated to running your business. It is operated as a separate entity from your personal account, thus making accountability a lot easier.
If you wonder who can open a business checking account and other information about this type of account, you are in the right place. Find the information you need to know below.
Business Checking Account vs. Personal Checking Account
Some business owners do not have a business checking account and so use their personal checking account for their business dealings. There may be a lot of reasons why these business owners have chosen this option. While at first glance, a business and personal checking account look the same, they are different.Most personal checking accounts are free or have easily waivable fees while business checking accounts, on the other hand, have associated fees. It is almost impossible to find a totally free business checking account as banks are either demanding a minimum balance or an initial account opening amount. Some banks may waive the fees attached to your business checking account if you can maintain a minimum daily balance, can maintain a number of direct deposits per month, or meet the minimum annual spending quota.
Why Get A Business Checking Account?
Tax simplification – As a business owner, mixing your personal funds with business transactions can complicate the process of tax reporting. Remember that you need to separate your business tax from personal tax. Owning a business checking account ensures that you get a clear overview of your business and personal transactions for tax reporting purposes. Failure to get it right can invite unwanted attention from the IRS, and this can put you in more trouble than you imagined.Professionalism And Credibility – Your business deserves to inspire trust, credibility, and professionalism both among customers and vendors. A personal checking account may not drive home the desired point in terms of trust and credibility. With a business checking account in your business’ name, vendors and clients are more likely to take you seriously.
Liability Protection – As a business owner, you registered and incorporated your business to separate your personal entity from your business. The same should be done with your accounts. You may run into trouble that may require your business account to be frozen pending the outcome of an investigation. Without a business account, your personal account will take a fall for it. This development may significantly inconvenience you and your household.
Preparation For Future Growth – Most businesses with a business checking account have plans to remain in business for a long time. You stand a better chance of establishing a fine relationship with banks and financial institutions with a business account. A business checking account also puts you on the radar with credit bureaus and can facilitate your business credit score. All of these are essential for qualifying for loans, business lines of credit, business credit cards, and other financial opportunities.
What You Need to Open A Business Checking Account
Nearly anyone can open a business checking account, so long as they have a registered business to use it for. To open one, below are some of the documentation that may be required by your financial institution.- Your Tax Identification Number (TIN) or Social Security Number (SSN) for a sole proprietor or an Employee Identification Number (EIN) for a business corporation, Limited Liability Company (LLC), or Partnership.
- Government-issued ID (passports and driver’s license acceptable).
- Business license or Articles of incorporation for corporations and Articles of Organizations for LLCs.
- Partnership agreements with the name of business and partners for partnerships.
- Organizing documents filed with the state wherein the business is located
- Certificate of assumed name/Doing Business As (DBA) name.
