Sole proprietors don’t always need to have a dedicated business bank account. However, sooner or later they will need one to account for their business. A sole proprietorship is a business owned by one person where there is no legal separation between the owner and the business. As such, the owner can run business transactions through his/her account.
Here is why it’s a good idea to open a business account for your sole proprietorship:
Easily Track Income & Expenses
When you are just starting, it isn’t necessary to run all your transactions through a separate account. However, as your business grows and the number of transactions exceeds the number of personal transactions, it may be time to open a dedicated business account for your business.
With a separate business account, it will be easier for you to manage and track your business transactions, from collecting revenue and writing cheques for expenses. Ultimately, a separate account for your business transactions will keep your record clean.
Boost Business Image & Professionalism
If establishing a good business image matters to you by providing you with a certain level of clout, then setting up a dedicated business account would be the right way to go for the get-go.
With a bank account, your business name will appear on cheques and other payment methods. This gives your customers a sense of business stability, strength and confidence in you without much effort.
Protect Proprietor’s Identity
Since your business is now growing and the number of transactions is also increasing, to reduce chances of a potential fraud or identity theft, trading with a dedicated business account will limit the damage to that account alone or the business trade name.
Learn More: 6 Keys to Successfully Manage Your Personal Finance
Build A Business Banking Relationship
Your business is growing and having a business relationship with your bank will become increasingly important to propel your business to the next level. For instance, a business account will make it easier to handle sales, payroll and taxes.
Additionally, a business banking relationship will set you up for credit purposes. With an active business account, obtaining bank financing to purchase or expand your business will be much easier. This also extends to acquiring business credit cards for employees to facilitate ease of doing business.
Learn More: 10 Reasons Why You Need To Have Multiple Financial Accounts
Key Takeaways
A separate business account will help you boost your credibility as a sole proprietorship and protect your identity as well. Keeping this separate will also help you keep track of your income/expenses and build a great relationship with your bank. Overall, having a business bank account as a sole
A separate business account will help you boost your credibility as a sole proprietorship and protect your identity as well. Keeping this separate will also help you keep track of your income/expenses and build a great relationship with your bank. Overall, having a business bank account as a sole proprietorship is a big win for any proprietor.
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