Real benefits of opening a business bank account for SMEs

It’s important to establish good practices when starting a business off the ground. This is true even if a business has grown into a medium-sized enterprise. Managing business finances through an official business account will help you plan strategies more efficiently and develop sound decisions regardless of the direction you want your business to go to.

Indeed, having a solid grasp on your finances will establish you like all successful entrepreneurs. Here are a couple of reasons why a business bank account offers a strong foundation for your business.

Separation of personal and business finances

It’s vital to manage your income to reflect your business growth, keep the books accurate, and make filing taxes easier when it comes. Separating your personal and business finances is a surefire way to track your budget more efficiently.

Depositing business income into a personal account will require you to review all deposits to track business earnings monthly, and you must account separately from your personal finances. And then it’s also possible that your personal bank may not offer services that suit your business, such as paying vendors directly from the account. Opening a separate business account offers access to services and products personalized for businesses to make your business easier to manage and grow.

Easier expense management

A separate personal and business account will make it faster to track business expenses. Making business payments from a personal account will require you to assess each monthly statement to see which expenses are personal and which are business-related.

Opening a business bank account will also help you save time as it streamlines both your business’s tax information and financial records. For example, finding deductions becomes easier if you don’t have to ruffle through every item in your personal banking statements.

Establish yourself as a serious and professional business

Having a business account will show the world that you are serious about managing your business’s finances since it allows you to use a business account cheque for paying supplies or services.

Transacting business from a business account assures clients that your venture is legitimate and not just a hobby. Managing your business finances also establishes your brand’s professional credibility when you’re just starting.

Provide clear records in case of audits

It might prove difficult for you to provide clear records in case of audits when you combine your personal and business banking. It will also be harder for your bookkeeper, or your accountant to extract necessary business financial information. It can also be problematic if you face a tax audit.

Establish business credit

You may find yourself looking for a business credit card as you keep growing. A business credit line, bank guarantee, and business loans all require good credit. An established business bank account that has a record of operating satisfactorily can improve your chances of getting a business credit approval when you need it, plus your approval won’t only rely on your credit rating.

End Note

No company is ever too small to utilize a business account and the benefits of opening one hugely outweigh the negatives, especially when you open your business account with top SME banking institutions like DBS. Start establishing good business financial habits by separating your personal and business finances. This way as your business grows and your financial needs to expand, it will make accounting, record-keeping filing taxes, business credit application quick and easy.