If you just set up an LLC, that is a huge milestone. But one of the savviest moves is setting up a business banking account for LLC operations. This is not about just making you look professional, but truly serving to keep your cash out of other people’s hands, keeping you legal, and positioning yourself on a whole different level for success.
This Is Why You Need to Keep Your Personal and Business Finances Separate
The main reason to establish an LLC is legal security. And keep in mind that if you carry the income and expenses of your business through a personal account, you may be forfeiting this protection. Why you need to make them separate:
- Clearly divides your personal assets from business liabilities
- Makes filing taxes easier + red flags if ever gets audited
- Helps to simplify finances, clear profit and loss tracking, expensively forecasting, as well as cashflow analysis
Co-mingling your personal accounts with business finances can open the door to legal claims, including “piercing the corporate veil,” which makes you personally liable for your money and assets.
Establishing Client and Lender Trust
‘Professional’ is how you want to present yourself. It demonstrates you are professional, organized, and reliable. Also, when the transactions are through a professional account then clients/vendor will also have little more trust factor in your company.
Perks of having one include:
- Accepting and making payments with the use of business checks or e-transfers
- Making requests for loans and credit while maintaining a reputable financial past
- Merchant services and more banking tools
Well, it’s called professionalism and this means you have to do things right.
Accounting Gets Easier (and Cleaner)
Personal expenses mixed with business at tax time?! That’s a headache you don’t need. When you have a business bank account, it makes organization not a nightmare all year long!
Benefits include:
- Integrates easily with accounting software from QuickBooks
- Better tracking of deductible expenses
- Clean records in front of your partners, investors, & tax people
When your tax come around or you find outside funding, you still need to know that what’s in the books is clean and error free.
What You Need to Open One
Business accounts are easy to open but need to bring in the right documents. Most banks will ask for:
- Any Employer Identification Number (EIN) for this LLC
- A government-issued photo ID
- Articles of Organization
- Your Operating Agreement
- The business licenses, copyrights or trademark along with any administrative borders that may come in the way of expansion
Your bank is a good place to look, you might even be required from the customer support side.
Bottom line: It’s One Step That Yields Great Benefits
As insignificant as it might sound, opening a business bank account matter. It enhances your LLC from a legal standpoint, adds credibility, and simplifies cash handling. This is the next best thing if you have made the jump to incorporate your business as an LLC in order to bolster and better prepare yourself for growth.
It also paves the way for easier tax file and future financing opportunities. And this small step forward can prepare you to be confident, compliant, and ready for the future.
