Business owners are suggested to open business checking account online or even offline. This suggestion doesn’t come out nonchalantly. When starting a business, many people start from small business with small funds. Many don’t think of a business account as they see it as unnecessary. This is why many small business owners have their personal accounts mixed with business account. In the long run it will hurt the finance as one can no longer differ which can be considered as personal property or not.
A business account is a crucial tool to the success in managing finance for a business. As one runs a business, a finance flow will certainly need to be monitored. This monitoring can get really complicated when the bank account is mixed with the personal account. And thus keeping separated accounts needs to be done.
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The Reasons for Opening Business Checking Account
There are a number of reasons to open a business account in the bank. Some of business owners even use different banks just to separate their business money with their personal money. The followings are those reasons to open business checking account online or offline directly in the bank.
Separating the business account needed for incorporated businesses.
For business owners who have incorporated businesses, there will be a requirement to keep a separated business account in the bank. The business can be a corporation or maybe partnership or even an incorporated sole proprietorship.
For the cleaner and more accurate bookkeeping.
Let’s take time to imagine what the checkbook will look like when the personal money is not separated from the business money. Imagine it to happen in about a year. The bookkeeping will become messy and nobody wants to deal with such mess.
A business owner will always want to be able to keep the appearance of being professional. Keeping a separated business account will help with the whole keeping an appearance of being professional.
A proof that a business is not just a hobby.
It’s important to show that a business is not merely a hobby. IRS or Internal Revenue Service is very strict in examining the realness state of a business. A business account, well maintained set of business books as well as business cards are needed as proofs.
Providing clear audit trail for IRS.
There is always a chance that IRS will audit a business. Of course, the world won’t end when it happens especially with a business account as well as clean recordkeeping. It’s also important to make sure that all expense receipts as well as invoices are being kept very well.
The Requirements Needed to Open Business Checking Account
There are some business bank account requirements that must be fulfilled in order to open an account. While every bank is different, there will be barely any difference in the requirements to open a bank account for business. Banks will usually need:
- Documents for Identification – Identity confirmation is always an important checking point. Bring an ID (passport, driver license and others) issued by the government to corroborate the business owners’ identity with the registered information related to the business.
- Licenses of the Business – Current business licenses will need to be checked by bank officials regardless the business type. A business can be an individual proprietor or even an LLC and the licenses will still need to be checked.
- Tax Identification Number – The number is a key to the tax management as well as the key in paying employees. It will be needed when opening a new business account too.
- Documents of Legal Incorporation – Bringing the legal incorporation documents is one important things as well. If a business is owned by several individuals or operated bases on board-advisory, the bank will then need a documentation granting an access to funds and transactions to the account opener.
- DBA Name Registration – This is important for business owners with DBA or doing the business with a fictitious name. It’s important to register the name and the documentation needs to be photocopied and kept. When opening a business account, the bank will need it.
Opening a Business Checking Account Online
A lot of business owners trying to find free online business checking account. It is possible to open a bank account for business online. A business owner will only need to have the needed documents scanned properly to be shown when asked. Make sure that the documents needed have been prepared before opening the account. Although that online account opening is possible, some industries will not be allowed to open the account through the online website and thus the account opener needs to go to the bank directly. Those industries include telemarketing businesses, gambling businesses, precious metal dealers and government entities.
If a business is not one of the four industries mentioned, it will be possible to open business checking account online. First, go to the official website of the online bank and then choose to register. The next thing to be done is to choose the bank account that will be opened. Some online banks are offering different options from full analysis business checking to the business economy checking. Be sure to choose the type that is truly needed. If available, choose the option to get debit card and don’t forget to review the additional services offered by the online bank.
There is No Reason to Delay Opening an Account Online
Opening a business checking account is undoubtedly important for business owners regardless they own the business as individuals or not. For the more convenience, some banks are offering online way to get a business checking account. Although that some businesses can’t benefit from this option; there are more businesses that can rely on this method of opening the business account online. Considering the importance of a separate business account, there is no reason to postpone opening the new one. The process to open business checking account online is not particularly complicated and painless.