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Why you need a business checking account

A business checking account can help business owners in several ways.

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Millions of Americans have side hustles, freelance or own their own businesses. And while it’s possible to use your personal bank account for money coming in and out of your operation, many professionals are best off with a business. Checking account — A dedicated place for your business-related expenses, earnings, taxes and more.

Do you have a business checking account for work? If not, there are several reasons why you might want to open one.

You can now easily explore your checking account options (and the interest you can earn) or use the table below to get started.

Why you need a business checking account

Here are four reasons why you should open a business checking account now.

It keeps business and personal finances separate

Having a business checking account helps you separate your business transactions from your personal ones. Not only is this smart for your own protection (you don’t have to give out your personal bank account information to buy supplies or make payments), but it also makes for an easier tax process.

It’s especially important that small business owners pay taxes quarterly — not once per year.

With checking business accounts, estimating your quarterly taxes is a breeze. You can easily reconcile your income, as well as any expenses that may be deductible. Doing this with a personal account can be difficult and time-consuming (you’ll have to sort through hundreds – or even thousands – of personal transactions multiple times per year).

It helps establish credit for your business

Having a checking account for your business can help build your company’s credit profile, which is vital if you ever want to apply for a business loan or Credit card.

Having credit won’t make it easier to qualify for these items, but you’ll likely get better rates and terms — at least if your business has good credit.

But just having a bank account is not enough. To reap the credit benefits, set up net payment terms (net-30, net-60, etc.) with any suppliers or vendors you use and make sure they report them to the business credit agencies. Then, make your payments on time to each party and watch your credit grow.

Starting a business with a checking account is also easy. You can explore your options online now or use the table below

It adds credibility to your business

A dedicated business account can add credibility to your business – especially if it’s just starting out. It also shows that you take your work seriously and that you are confident in its trajectory.

Using your personal accounts for business doesn’t necessarily equal the opposite, which can raise red flags with new clients and vendors. Is it just a hobby or something you’re not really invested in pursuing? Are you skirting taxes or running things under the table? Hangups like this can mean the difference between snagging a new client and losing valuable business.

This can protect you from liability

Finally, separating your business from your personal life can provide a certain level of liability protection — especially if you register your business as its own entity, such as an LLC or S corporation. If you don’t take these steps and you are sued by a consumer or another business, it could put your personal finances and assets at risk (ie your money, car or home could be seized to pay a court judgment).

For added protection, always consider investing in professional liability insurance. This provides an extra layer of insulation in case you are sued.

Shop around for your account

If you’re ready to open a business checking account, be sure to weigh your options first Banks, credit unions and online banks offer these accounts, and their terms can vary quite a bit. You’ll want to consider any deposit limits, minimum balance requirements, fees and transaction restrictions before making your decision.

You may also consider an opening High Yield Savings Account for your business. This can help you prepare for unexpected repairs or expenses that may crop up. again, Terms and rates can vary widely on high-yield savings accounts, so be sure and shop. You can shop for the best business checking accounts here or using the table below.

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