Opening a business bank account after registering a company is an essential step. Using a separate bank account helps keep things clear by separating business transactions from personal finances. It also gives you peace of mind because there is less possibility of mixing up your personal and corporate finances when you have a dedicated business account.
You can set up a business bank account after registering your company by following these steps:
- Choose the best bank for your company: Comparing banks and building societies is important when searching for the best financial institution for your company. This can help you choose the best combination of features, advantages, and customer service for your company.
- Choose the kind of account you require: The size and nature of your business will determine the kind of account you require. Current accounts, business savings accounts, and merchant services accounts are the most popular types of accounts for corporations. The convenience and flexibility of online banking make it an appealing choice.
- Open the account and make a deposit: You can open your account and deposit once you meet all of the requirements. Check with your preferred bank before creating an account to make sure you have the required amount ready, as some require a minimum deposit.
- Start using your account: You can use the account for all of your company banking requirements once it’s ready. To make sure you don’t overdraw, don’t forget to record your transactions and keep an eye on your account balance.
Reasons why you need a business bank account:
- Simplify the Tax Preparation Process
Your tax preparation can be automated if you have a bank account. Since you or your accountant may connect your company bank account transactions with tax preparation software, it’s considerably simpler if all of your business income and spending go via your bank account. In this way, you will avoid a great deal of time and stress while attempting to sort through your finances around tax time, regardless of whether you employ a tax preparer or do it yourself.
You won’t have to try to determine which expenses are personal and which can be attributed to your firm when you establish a business bank account. Which makes deductions at tax season easier.
- Create Business Credit
You can build a relationship with a local bank for credit purposes by opening a business account there. When determining whether or not to grant a business a loan, lenders will consider the company’s credit history. A good business credit history can help you acquire a loan with a reasonable interest rate if you wish to take out a loan to finance equipment, hire more staff, move to a larger place, or in any other way you may decide to expand your firm. Making purchases on your company’s behalf can be challenging if you don’t have access to credit, whether it be bank statements, a credit card, or a line of credit.
- Makes the business look professional
Customers and suppliers may perceive using a personal bank account for company purposes as unprofessional or even fraudulent. In contrast, the company will appear more reliable and professional if all business transactions are conducted through a business bank account.
All transactions must be made from a bank account in the name of the limited company, whether the firm is paying for supplies and services or individuals are sending money to your company. As a result, the name of the business will immediately remind other businesses or individuals of the product they bought when they view their bank statements.
- Business Accounts Offering Additional Features
Additional services are available to businesses with several business bank accounts. Automated invoicing, accounting tools, cashback, free transfers, overdraft access, and rewards are a few examples of these extra services. These bank accounts come with several features and tools that make managing your business easier.
- Better Financial Management for the Company
A company can accurately calculate its deductible expenses and lower its corporation tax liability at the end of the period by properly identifying and classifying business expenses through the use of a separate business bank account. Consolidating expenses will become more difficult and time-consuming if a business operates through a personal account.
It is much simpler to keep business funds different from personal funds when you use a business account. This is due to the fact that you are able to examine the business account, and the funds that are easily available should all be firm funds.
It is hard to distinguish between company and personal funds while using a personal bank account.
The directors’ personal finances and assets, as well as any shareholders who may have contributed money, would be protected by improved financial management of the business. It protects these assets from any court cases or obligations the business may have acquired.
