Opening a business account should be one of your priorities when starting a business. These accounts serve as the lifeblood of a successful business. A business account plays an imperative role in growing your business and protecting it and you. Having a separate business bank account is crucial to keep your business finances separate from your personal finances.

It allows you to track business expenses, deposit payments under your organization name, establish the company’s credit history, and simplify tax reporting, maximizing your business potential and leading to success. This article outlines the top reasons for opening a business account and how you can open a business account smoothly.

When Should You Open a Business Account?

As an SME owner, you should open a business account when you get an Employer Identification Number (EIN) from the IRS or when your business starts accepting or spending money. This is because the IRS requires all incorporated businesses to have a business account. This rule applies whether the business structure is a partnership, a sole proprietor, an LLC, or a corporation. You can get an EIN without having a corporation or LLC. However, the US Small Business Association advises opening a business bank account as soon as you get an EIN.

Even a sole proprietor is not legally required to have a separate business bank account, but creating one can work wonders and offer peace of mind. Moreover, a business account is a prerequisite for getting business loans. Traditional banks, digital banks, or online lenders won’t approve a loan unless they get business bank statements and money can be deposited into a business account.

If you need to accept credit card payments for services, you must have a business account. Also, a business account is necessary if you run an e-commerce business in order to accept payments via your point-of-sale system.

Top Reasons Why Every Business Needs a Business Account

There are multiple good reasons to open a business account. If you’re deciding whether or not to open a business account, read on to discover the reasons why a business account can provide a solid foundation for your business.

Keep Clean and Organized Financial Records

First and foremost, having a separate business account alleviates problems caused by combining your personal and business finances. When your personal and business finances are mixed together, it is challenging to track vendor payments, business cash flow, client invoice status, and transactions. A business account helps you separate your personal expenses from your business and seamlessly track your business cash flow. Additionally, you will have a better way to manage the budget with a transparent overview of spending and expenses.

Legal Requirement for Certain Business Structures

Another significant reason why businesses should have a business account is it is legally required for new corporations to have a bank under their corporate name. If your company operates as an LLC, LLP, or corporation, you must open a business account with an IRS-issued EIN number. Without a business account, a corporation cannot receive payment from third parties as they will not be able to make a cheque or send payment.

Make Tax Preparation Easier

A business account helps automate your tax preparation. It’s much easier if your business expenses flow through your business account because you can link your business account transactions with tax preparation software. With a business account, you will not have to separate personal expenses from business. This will save you time and headaches when trying to organize your finances come tax time. Also, it makes tax deductions more manageable, and you’ll have a clear audit trail.

Protect you From Business Debt Liabilities

One great advantage of starting your business as an LLC or a corporation and having a business account is the fact that should your organization become unable to pay the debt, you will not be responsible for the debts unless you do something to put yourself at risk, like breaking the law. When personal assets are kept separate from business assets, it will protect the business owner’s liability.

Prove to the IRS Your Business Is not a Hobby

It is necessary for your business to be legitimate and not a hobby in order to deduct business expenses from taxes. The IRS is picky about proving your business is a valid business, not just a hobby. To legitimize your business, the IRS determines whether you’re trying to make your business successful or not. So, you should maintain accurate financial records and keep all business and personal spending separate to prove your business is legitimate. The best way to do this is to set up a business bank account.

Secure Loan and Government Support for Your Business

When your business grows, you may have a need to apply for a business credit line, business loan, or any other financing. Having a business account can make it easier for you to obtain the required funding through grants, loans, or credit. Lenders are more likely to approve your funding when they see your business is legitimate and has separate recognition. Sometimes, lenders will require you to submit a few months of bank statements. Some financial institutions accept personal accounts when providing loans, but most require a business account to provide credit or loans.

Make Your Business Look More Professional

The last benefit and strong reason to open a business account is that it demonstrates your professionalism and your dedication to an organization. You don’t want your clients to think that your business is a side hobby. A business account puts your business name on credit cards, checks, and other payment modes, which maintains credibility and professional demeanor.

Introducing Fazz Business: Grow Your Business Without Limits

When looking for the best business account, Fazz Business emerges as a compelling choice. Fazz Business is a leading fintech company in Singapore that offers cost-effective and transparent financial services to small and mid-sized businesses across the world.

Fazz Business Account is a streamlined solution for fast-growing startups and web3 companies in Southeast Asia. Opening a business account with Fazz comes with zero admin fees, zero bank fees, no minimum balance requirements, and zero subscription fees. It offers a wide range of business banking features, including international transfers and multi-currency features, supporting transfers in 50+ currencies.

Unlike traditional banks, Fazz Business Account charges a minimal one-time initial deposit and very low compliance fees for foreign entities, making it an excellent choice for foreign businesses. Fazz Business Account provides all the above-mentioned and many more benefits in fintech solutions for businesses worldwide. Whether you’re a Singaporean resident or a foreigner, you can open a Fazz business account smoothly online in a few steps.

Open a business account today and drive your business forward!

FAQs

How can I open a business bank account?

Choose a bank or fintech company that offers a business account with rates and terms you prefer. You can open an account online via the website or in person by visiting the branch. To open a business account, you will need to provide documents to the bank. Documents may vary depending on the bank you choose. The necessary documents include an EIN number from the IRS, a business license, proof of company registration, an ownership agreement, ID documents, and a business plan. After the document submission and verification process, your business account will be created.

What are the best business account options in Singapore?

If you’re looking for the best company to open a business account in Singapore, here are the most recommended options:

• Fazz Business Account
• OCBC Business Growth Account
• UOB eBusiness Account
• DBS Multi-currency Account

Meta-description: A business account is key to growing your business to new heights by keeping the business dealings separate from your personal. Explore the top reasons why every business should have a business account in 2024!

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