Biz Banking 101: Things you should keep in mind when opening business bank accountsNov 20, 2021
My number ONE piece of advice to any business owner: get a business checking account. Two reasons you want to keep your biz finances separate from your personal:
1. You are less likely to overpay income taxes by ensuring no expense gets left behind.
Remember that $40 ring light you bought when you first started your biz? Or what about the Calendly subscription you’ve been using your personal account to pay for? That $12/month adds up to $144 per year in tax deductions. If you aren’t being intentional with your finances, you might forget to include that in your financial statements and end up reporting higher earnings than what you actually made. When you report higher earnings than what you actually made, you will pay more in taxes than you should have 😰
2. You won’t have to sift through thousands of transactions to do your bookkeeping.
Your future self will THANK YOU for not making her sort through dozens of pages of personal transactions (& your future bookkeeper too).
You might be thinking, “Okay Meg, I’ll open up a business bank account, but which bank should I use?”. The short answer is, it doesn’t matter! It can be the bank you use for your personal finances or a different one. Personally, I bank with Chase for my biz and I love it, but there is no right or wrong bank to go with. A few things that I look for in a bank:
- Do they charge monthly maintenance fees and if so, how can I avoid them?
Some banks do, some don’t. If they do charge a fee, it will be around $10-$15 per month and can usually be avoided by meeting certain criteria. Don’t avoid a bank simply because they charge maintenance fees, just be mindful of how to avoid them.
- Do they offer savings accounts?
It’s always nice to have the option to add a free savings account. I like to put money in a separate account for things like taxes and large business investments. Keeping that money out of my main account reminds me that I should not be touching it for anything except those goals I am working towards.
Now you also might be wondering, “Should I get a business credit card?” and that is a great question. There are many benefits to having a business credit card, so long as you are using it responsibly.
The first business credit card I opened was with Chase, it was their Business Ink Unlimited. In just ONE MONTH I earned over $1,000 in cash back rewards 🤯
The secret? Sign up when you are ready to make big purchase(s) in your business.
With this credit card, Chase will give you $750 if you spend $7,500 in purchases within the first three months of opening the account. I opened my Chase Ink credit card when I was ready to invest in a website designer and copywriter and my cash back helped offset the cost. How freaking cool?!
Not only that, but they offer 0% interest for the first 12 months after opening the account, which means you can spread out the cost of that large investment over a number of months without having to pay interest. This credit card really is a no-brainer.
After those first 12 months, you’ll want to make sure you pay off your balance every month to avoid paying interest.
Now, if you are brand new in your biz, maybe your expenses still exceed your costs, or you haven’t started taking clients yet, I still recommend starting with a business checking account. Instead of using your personal account to pay for your business expenses, make a one-time transfer from your personal checking account to your business checking account and use that money/account to pay for your business expenses.
If you end up needing more money, do it again! There is no shame here, we all start somewhere, but treating your biz like a biz is always the first step toward financial success.
It's time to stop losing sleep over spreadsheets.
Feeling lost when it comes to all things biz finances? It’s time to take DIY bookkeeping off your plate, so you can really step into your role of CEO.