Starting up a business and running it after is rather a complex process. Some of the aspects involved are enjoyable. For instance, choosing a brand name and shaking hands of the first partners or hiring employees for your team and earning your first billion of dollars.
However, there are routine types of things to do. They are connected with documentation and lots of bureaucracy. One of such aspects can be opening a business bank account. It involves many stages and is necessary for a person interested in serious business. So, what is all the fuss about? Let’s try to understand every detail of what you are going to face.
Do You Really Need It?
Well, if you want to live your life to the fullest and keep your business safe you need to keep these two spheres separated. There are many advantages of such approach but you should bear the same in mind as soon as money is involved. As long as you mix everything up, you get under the risk of losing all of your earnings one day.
Even though it may seem complicated but the explanation is simple. Say, you have a Limited Liability Company and your money is not separated. In case, your company faces a trouble you are going to lose all of the money which you could have retained, if you were an individual. In other words, the liability protection is not what you can rely on in this situation.
There is another important reason. This is reputation. A business checking account makes it possible to look more professional and trustworthy for a businessperson. For instance, it gives you an opportunity to have custom checks and company cards with the name of the organization on them. In addition, this account makes things much more simple when the tax time comes.
Generally speaking there are 3 main reasons why you need to include this option in your business:
- To build yourself right reputation
- To have proper control over your finance
- To build up relationships with a bank
Two Types of the Account
To begin with, there are two types of business accounts. The first one is business bank account. It is preferable for regular expenses as well as accepting payments. Another type is business savings account. It is preferable for money used as a leftover. Which one to choose depends on the growth of your business.
At the very beginning you are likely to deal with invoices and pay for services. At this stage you need to think about a business checking account. Once you have saved a good sum of money it is time to think about business savings account. In this case, you will be able to keep your finance safe.
How to Open It
No matter which type of business account you choose, banks will require certain documents to confirm details about your company. Depending on the state and type of business they may vary. In most cases, you will be asked to provide such documents as business license, partnership agreement, social security number and various documents of such kind.
The whole list of them is rather long. For more specific information you need to go to the bank you are going to work with. Even though the amount of the work to be done may sound terrifying the results are worthwhile. Before you proceed to the next step you should make sure that you have checked all the details thoroughly. Otherwise your documents will be declined and you will have to waste precious time to submit them again.
Which Bank to Choose
If you have managed to go through the documentation, its approval and the whole bureaucracy, things are going to be much easier. At this stage you can start choosing the right bank.
There are many options to consider. A big corporate bank, a regional one, or a credit union? The answer depends on your goals but you should think about the following points.
Banks have fees. So, do not forget about to inquire about their structure. Some banks charge clients for not keeping a minimum balance in the account. «Maintenance fee» is also charged sometimes to keep your account open.
ATM fees are widespread as well. Usually, large banks offer more beneficial fees but you should still ask about the increase rate and whether the rates are promotional or not.
Lending ability is another aspect to know about. Can you get a small business loan or there are particular requirements. In most cases regional banks and credit unions are more friendly at this point.
Online features are desirable and many banks do provide them. They are really vast. For example, you can transfer money from a business account to a personal account via the Internet. Ask more about which features you are going to have.
Well, as you see an open business account is something that your business really needs. Perhaps, the process of opening it is rather complex and time consuming but it gives a number of advantages. Now that you know what it is and how to register it, you can make a balanced decision.