Powerful Tips For Your New Business Bank Account

Most new business owners cringe at the idea of keeping an accurate set of books. While the true number cruncher relishes the idea of keeping an accurate set of books, the rest of us label accounting as a tedious task. But without an accurate set of books, all businesses will fail. Accurate books are necessary for a business owner to understand the financial status of her company. The owner who maintains an accurate, financial picture of the company can thwart potential disasters by shifting the company’s general direction. Financial health – for small and large businesses alike, can determine whether a company can be saved or broken financially. This article will discuss an important asset for any small business: the business bank account.

Regardless of the type of business you are starting, you need a business checking account before you do anything else. A business checking account is very simple to establish: visit your local bank and ask them for one! Before you can setup your account, most banks will require that you file for a DBA. Your bank can give you the specifics if a DBA is required. Most banks offer a fee free checking account for new businesses. If you discover your bank does not offer free checking accounts, shop around and you’ll eventually find one that does. Visit all the banks near your home or office. Eventually, you will find a bank that offers a fee-free business checking account. Also, make sure you get a debit card or credit card that is attached to your account (this is important!).

You should manage your bank account with three guidelines in mind. The first is: do not pay business bills with cash! Why? It’s too easy to forget about cash payments; they may never make it into your expense ledger. Your business bank account exists to pay for expenses and to make income deposits. Every bill needs to be paid through your account via check or credit card. You need a permanent record and by writing a check or using your credit card, you guarantee that your transaction won't be forgotten at the end of the month when you are crunching numbers.

Another rule to live by with your bank account: deposit every bit of income into your account. This includes cash and any checks that may have been made out to you instead of your business name. If you can follow this rule and the one listed above, you will be guaranteed a record of your expenses as well as your income. When it comes time to balance the books, you will be quite pleased that all income and expenses have been properly recorded in your account.

The last rule to keep in mind: you should never pay your personal bills through your business account! At the time of this writing, it is legal for a sole proprietor to mix funds in their bank account. However, it is not a good idea. Mixing funds will create more work for your bookkeeper. Mixing funds can also cause unnecessary tax and legal complications when there is more than one owner of a company. The simplest solution to avoid such problems is to never mix expenses!

Follow the above guidelines and you will find that it’s much easier to manage your books. The seasoned business owner and the new business owner will both benefit by following the above suggestions.

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