Using a personal account for your business functions blurs the professionalism line. One is likely to use business cash for personal errands and vice versa, making balancing one’s accounting books a somewhat cumbersome affair. Having a separate business account will helpto keep track of client payments and cash out to suppliers and other company costs. It also helps you when tax seasons come about or when you have an emergency. Here is an in depth look at the importance of the same.
A primary reason you ought to have a corporate count is so that you’re able to separate your assets should anything happen to the company. If for any reason anything happens, having your salary on the same account as what runs your business can leave you bankrupt in a worst case scenario. That could happen in the instance where you’re in debt,or the business gets sued. When they are not the same, you’re able to protect both yourself and the company. Not doing so could potentially have a plaintiff come after your assets if your account happens to show that the limited liability company (LLC) did not have what constitutes a “corporate veil.”
When tax time comes round, it would be a headache trying to sort out personal drips and what business expenses you can write off. Imagine sieving through receipts from the grocery store or an expensive bill after installing the latest SOFFITS installation when renovating the outside of your house from corporate lunch meetings and air conditioner installations at the office. Sitting through this would likely take hours if not days to sort through. Having a separate account makes filling taxes more manageable,and you won’t miss out on deductions.
Having a business account makes you come across as professional when dealing with clients. They are likely to trust you more to do future business with you when they write a check to you. While that does not necessarily give you an upper hand, it does shift a client’s mindset where they view you as a business owner and not merely as a freelance writer. Working alone doesn’t require you to have your account necessarily, but it becomes useful should you scale up and auditors come round.
If you’re convinced that you need to make a move, the process is quite simple. You can use the same bank as your account or find one that is business friendly. It pays to take time to research what bank is best and if they offer special rates should you be in a professional group. Also, be sure to read the requirements and get what is required to make the process seamless.