Getting a business bank account is just like getting a personal one, only you need a little more documentation; this could be your business license or formation documents (e.g., LLC Documents). In most cases, as a sole proprietor you will not need any of these documents--varying by bank.
I know that sometimes as new business owners, we decide to put our money in our personal bank accounts and not separate it. Sometimes that may be okay when we're just starting and getting our footing, but something I've learned over the last 12 years is that without a business account, we miss out on a lot.
Here are 3 reasons to have a business account:
Getting Funding for your business: As business owners, there may be a time when we want to apply for some kind of funding to help in any area of our business like marketing, inventory, expansion, etc. Many lenders will need bank statements, proof of business income using bank statements, and access to your cash flow.
Giving them your personal statements isn't a good look, and no lender wants to sift through personal and business purchases—in that case, you're better off getting a personal loan.
Note: Even if you are a sole proprietor, you can still get a business bank account. Being a sole proprietor does not mean you have to deposit your business income into a personal account.
Grants: Over the past year, we have been seeing an influx in grants being given away to business owners. And all of them have a checklist that shows everything you need to apply, and one of the many things required is a business bank account.
This not only shows that you are a legit business, but it shows the grant providers that you have your business in order and that the funds are distributed properly.
Imagine all the grants you qualify for, and the only thing holding you back is not having a business bank.
Note: Many newer grants are requiring that you connect your business bank account using platforms like Plaid. This gives them direct access to where they will deposit the funds. If the bank account does not match your business name, you may face rejection or they'll ask you for your business account details instead of your personal.Keeping up with your cash flow: You want to know where your money is going at all times. It is hard to keep up with your cash flow when your money is mixed in with Chick Fil A purchases and out-of-town shopping sprees.
Depositing money directly into your business bank account online or cash at your bank allows you to keep up with every bit of money that comes in.
If you need to make a personal purchase, determine how much of your income you will pay yourself and simply transfer it to your personal bank account. That way, you are limiting personal purchases on your business account.
As business owners, we must know where all our money is going and where it's coming from. Tracking our income and expenses starts with having a business bank account to aid in our business upkeep.