As word-of-mouth travels and sales roll in, it’s official – you’re a small business owner!
Over the next few months, you’ll take steps to make your workflow more efficient, and ultimately, more professional. When you begin to receive payments, you’ll discover it’s time to talk to your banker about opening small business checking and savings accounts.
Here are four big reasons why.
Keeps personal and business finances separate
As your business grows, it’s going to become increasingly difficult to keep your everyday banking and business banking from mixing. Was that $20 deposit from selling my crafts on Etsy, or the money the neighbor paid back to me? If a similar scenario has popped up, how will you accurately report your small business income on your taxes when personal and business transactions are lumped together?
To keep the IRS happy, it suggests using a record keeping system that shows a summary of your business transactions including income from sales and deductions for business expenses. All of this information is visible on your small business account statements from Elevations Credit Union. Deposits reflect income and credits. Withdrawals reflect expenses.
Adds legitimacy to the small business
Are you hoping to purchase a work-only vehicle, new business equipment, or a cute little downtown retail space for your small business? Having a business-only savings account serves as a nest egg where you can save for business expenses. However, moving forward with bigger purchases will likely require a small business loan or commercial mortgage.
When you apply for funding, having a dedicated small business account shows you’re serious about your plans, even though you may be a business owner. After all, you want to put your best foot forward, right? Having a dedicated small business checking account that reflects regular deposits from paying clientele gives your lender a green flag toward approving your loan application.
You can also build credit for the business by applying for a small business credit card, using it for business expenses and paying it off each month. This shows your responsibility with money and ability to meet payment due dates.
Hides your personal contact details
Think about this: If you’re buying supplies or paying for a rented storefront with your personal checks, vendors have access to your home address, phone number and other details that are printed on your checks. If a business transaction hits a road bump, you may not want the other party to have access to your personal information.
For most small businesses, a layer of privacy is important. Checks drawn on a small business account can reflect your business address (or a PO Box) and work-related phone numbers, emails and other contact information. By setting this boundary early on, you can save yourself from future headaches.
Creates a small business support system
Many small business owners start out as solopreneurs. By opening small business banking accounts, you instantly have a team of business professionals to chat with about your financial growth and business needs.
For instance, Elevations Credit Union Small Business Banking Team can help you learn more about saving for retirement, understanding terms on small business loans, applying for a line of credit to fund your next growth phase, and setting up online banking so you can pay your vendors easily with a few clicks.
Whether you’re making a little extra cash with a weekend side hustle, or going all in on a new storefront, the Elevations Credit Union Small Business Banking Team would love to be by your side. Contact one of our Financial Service Guides by calling 1.800.429.7626 or heading to one of our conveniently located branches.
Insured by NCUA