If you are a business owner, you may or may not already have a business bank account. But is it necessary to get a bank account for your business? Here’s our analysis on why it may be a good idea to get a business bank account.
When you’re a budding entrepreneur, starting your own business is an exciting, empowering and thrilling experience.
There’s just so much to soak in right away: from figuring out the product or service launches to strategising your next marketing campaign. In the midst of all the ‘chaos’ and endless things to do, opening a business bank account may not be considered a top priority, especially if you can use your personal account to pay for business expenses, right?
Not exactly. And that could be far from the truth.
Whether you own a home-grown enterprise or a large corporation, separating your personal finance and business expenses can protect you in more ways than one—no matter how tedious or unnecessary it may seem. It can also save you time and keep you out of trouble.
Let’s share why it’s necessary.
Here are 4 reasons why you need a business account for your business
Your finances can get overwhelming sometimes, so ensure you have the proper banking resources to make your life easier.
1. Your business has too many transactions
All entrepreneurs want to start their business at the lowest cost. Because of this reason, most make the mistake of not setting up a business bank account, not realising that it is more beneficial for them in the long-term.
Once your business grows, it’s only natural that the volume of your banking transactions will grow along with it, which can complicate your personal statements if you choose to mix your business and personal transactions.
If your business income and expenses are getting further complicated and extensive, it can be a serious concern to your bank (and your mental state) come tax season. The last thing you want is to spend long hours untangling your personal and business finances, rather than focusing on growing and running your business.
To avoid this and the possibility of inaccurate bookkeeping, ensure a clear delineation between personal and business expenses, and of course, set up a separate business account. Not only will you have a clean record to give your accountant, but you can save yourself a major headache.
Pro tip: Keep all your invoices and receipts to match your checkbook.
Professionalism could be the reason why a client chose your business over another.
2. First impression matters, and the image of your business matters
Just like how you would dress up for an interview for the job of your dreams, it’s crucial that you maintain a clean, polished image of your business for the sake of its longevity and future.
No matter how small or big your business is, writing checks out of a personal account is not only bad for your image, it might make others take you less seriously. It could also hurt your business’ reputation and credibility because your tactics might appear sketchy. A big no no.
Yet, if you have a business account, your business name will appear on checks and other payment methods, giving clients and customers more confidence and trust in you because they know that your business is legitimate.
Remember: Since you have not yet established your business, preserving and enhancing your business’ image is key to your success. Convey strength and confidence with customers and clients through transparent and trustworthy bookkeeping.
With many customers going cashless and contactless because of the pandemic, it will only be to your business’ advantage to have an account that can accept credit card payments.
3. Your business is starting to accept credit card payments
This is the most common and biggest reason why entrepreneurs open a bank account for their business. It is an understood fact that you can’t accept credit cards through a personal bank account, so the only way to facilitate this need is through a commercial account.
Sure, some macro businesses or small town enterprises may not consider this as an option because they still rely heavily on cash, but if your business operates in the digital sphere or wants to venture into digital payments then this is a pretty straightforward reason.
To a degree, using credit card payments in your business reflects your ability to adapt to the norms of the day—since the world now trades with credit cards, you’ll have to begin accepting it as a way to expand your business.
Besides, a business current account makes the process of accepting cards way easier and seamless, and who doesn’t want convenience in their lives?
If you are thinking about getting a business credit card, then opening a business account alongside it makes sense.
4. Your business might get a loan or a business credit card
One of the biggest challenges that many small businesses face is obtaining the capital necessary to fund their initial growth. In a perfect world, all entrepreneurs would have enough money to grow their own business; but the reality is, most must either bootstrap, crowdfund, sign up for business credit cards or even get a loan.
Though it isn’t ideal to borrow money to grow your business—most of the time, it is an effective way to channel more funds to your business. The funds can go towards things like working capital, equipment and machinery, supplies, inventory, furniture and more.
If you are surveying business credit cards or loans, you may want to consider the CIMB Platinum BusinessCard. Not only will the card help your business cash flow management, but it could also establish your credit history, and offer overall convenience. But the best part is it eases the process of applying for a loan. After all, in some cases, a business credit card comes bundled with a loan, and having that credit history gives your business some brownie points when applying for a business loan.
Looking for a business bank account? Apply for a CIMB Business Current Account-i today!
CIMB Business Current Account-i key features
- Get your account number within the same day once you complete your application at your preferred CIMB branch.
- It’s a convenient and secure way of performing online account inquiries, banking transactions, fund transfers, bill payments – all through its dedicated platform BizChannel@CIMB.
- Manage and track your transactions easily with their complimentary monthly statements.