The United States Small Business Administration has always recommended opening a business account to keep it separate from your personal account.
One business checking or savings account is a necessity, but many business owners choose to open multiple accounts. Why you might ask? Let’s help you understand the benefits of having multiple accounts.
Who doesn’t love to be organized? You will have a lot more free time in your life if you are successfully operating additional accounts. You can have one account designed to just pay taxes, one for future savings on a big project or just align one for funds coming into the business.
Keeping these areas separate gives you a clearer picture of where your money stands at any single point in time. In addition, you may enjoy different account features from your financial institution. In some situations, you could use a lower minimum balance for your expense account while a high-interest savings account with a higher minimum balance might be more suitable for long-term projects.
And, don’t forget that being organized will have a good impact when the time comes around to approach your bank for additional financing.
2. Ability To Track Records
Establishing a positive track record is something banks always look at when considering financing for a customer. Maintaining multiple bank accounts will show financial institutions that you are managing your finances the right way.
Many lenders won’t consider you for a loan if you don’t have a dedicated business checking or savings account in place. No matter what, if you have a strong record of keeping your accounts in good standing, you will always be on the good side of your lender.
3. Staying Secure
In the COVID-19 pandemic era, security is more important than ever. And, security is something a small business can’t turn a blind eye to. Keeping your funds in more than one location can help shield you from cybersecurity attacks. At a bare minimum, you should ask your bank about adding protection features into your accounts when you open it.
4. Keeping Money Separated
Having an account for operating expenses helps you separate capital expenditure from day-to-day costs. This helps you understand how your business is performing and what operating costs are being covered. But don’t forget about identifying seasonal factors that hamper your business. Certain times of the year could see a fall in income.
5. Looking Toward The Future
Setting up a savings account for future investments and projects will protect you from the demands your finances could face if any of your equipment fails. Look at it almost as an emergency fund instead of a savings account. It never hurts to have funds that can help future development.
Having multiple business accounts helps keep you organized, secure and could help you secure more financing in the future. The right choice depends on your goals and what your business does. The financial well-being of your business is vital to its success, but you need to make the choice of how many accounts works the best for you.
See what features Stearns Banks offers with its business banking offerings by clicking below.