Do I Need a Business Checking Account If I'm Self Employeed?

If you are self employed, you may think that simply using your personal banking account is sufficient for all of your needs, but getting a business checking account could help. Even though you work for yourself, you are still running a business. In order to help keep budget and tax information separate and clear, it is helpful to have the cash flow in and out tracked through an account different than your personal accounts. While a business account may include different fees, it is also structured with tools that could help your business. 

 

If you have a hobby or startup business and it looses more than it brings in, you might be under the impression that it is easier to simply use your personal accounts to handle the financial transactions. However, by taking advantage of a business checking account, you help make the business more credible. Customers and banks can take the company more seriously if they make a payment to a business name, rather than your name. That could be the nudge your young company needs to make it viable. It can also help separate the losses of the business from affecting your household cash needs.

Especially for those businesses that are structured as a corporation, partnership, or LLC, it is important to be very careful about keeping personal and business transactions labeled correctly through a business checking account. If charges and income are confused between the two, there could be unfavorable legal repercussions. Both entities could be sued for liabilities. While you may think it easy to simply remember which transaction belongs to which entity, the hectic pace of life could easily cause a mistake. You may accidentally attribute a trip to an office supply store to the business, when it was actually for your children's school supplies.

Companies that are sole proprietorships are the least affected by using a two-for-one approach to banking. However, having separate accounts will make it easier to keep the books when the business is handled in its own accounts. Otherwise, you end up with situations such as worrying if the mortgage payment will bounce because a large business expense had to be made. It is important to speak with your accountant and banker to ask the important questions about your particular situation to make sure a business checking account is good for you.

If you would like to learn more about a business checking account in the Huston area, visit Green Bank.