Why should one have a separate checking account for business
The fact that business is completely undeniably complicated is a no-brainer. It requires one to possess adequate knowledge in human relations, management, math, law, leadership and an efficient transition between these fields. The same factors, when taken into consideration, will explain why it is necessary to form a separate business checking account in spite of the option of managing the business from your account.
Although it might look like creating a separate checking account for business would be a lot of inconveniences, it will only reduce the hassle. As the business expands, it will only get tougher to handle your personal and business finances from the same account. Given that business would require the flow of your finances in many directions, mixing them up with your transactions could lead to losing track of financial flow and immense confusion. Hence, keeping the bigger picture in mind, it is more convenient to go through the little inconvenience of separating your personal and business accounts.
A separate checking account for business will make the scenario more professional in the eyes of your clients. You definitely wouldn’t want your clients to question your firm’s professionalism from the lack of a business account during transactions. A separate business credit card will be put to use for all the business transactions. This will enable ease of monitoring the business expense while providing you with the many perks that accompany a business credit card.
The lack of a separate business checking account could lead to IRS Audit issues. Apart from that, the presence of a business checking account also secures you legally. The creation of a business checking account enables the court to view your firm as a separate entity. Hence, when a legal issue arises with your firm, this account will not allow the petitioner to sue you as an individual. However, the lack of this account takes away just that security from you, and it is capable of putting you through quite some trouble.