Many people often have a savings account. My first personal account was a savings account that my parents set up. Later, I did get a checking account after I graduated high school and could write checks. However, should a business also have a business savings account? There are some good reasons for a business to have a savings account, so let’s dig into it.
Why You Should Have A Business Savings Account
If you are the business owner it is best to keep your personal account and business account separated. It makes it simpler to balance the books of your business, to file taxes, and provide an easier time dealing with an audit from the IRS.
Things can get very messy if you mix the money with your business and personal money. It is best to keep them separate.
Just like in real life it is a good idea to save for a rainy day. We do not know what the future holds and your business could be booming one month and dead the next. There are always constant changes in business and it is a good idea to be prepared so you can weather the bad times and make the appropriate changes to get your business booming again.
Going in the opposite direction of a rainy day, an incredible opportunity may come about and you need cash right away. One example of this is let?s say a national wide box store with 10,000 stores is willing to carry your products if you can get them enough inventory within the next 30 days.
While you could get a loan easily to take advantage of an opportunity, time may not allow for it. If the money is needed within a week to take advantage of the opportunity, you could be left trying to get loan from the bank while the time runs out on a lifetime opportunity. It is better to be prepared and have some immediate cash on hand.
Most agree that saving is a great habit to get into and if you do this how are you going to do it? One way is to take a hard look at your expenses, what are some things your business could live without? Or you could get in the habit of depositing a set amount of money every month into your business savings account.
There are more ways to save, but the bottom line is you are building core traits that will serve your business well in the long run. Savings does require discipline, but there is a correlation between discipline and successful business owners.
The final reason is you never know when the interest on a savings account may rise. It could be low today, but what about the future? It could rise to exceed 10% (like it did in the 1970s) and if you have a stockpile of cash in a business savings account, you could be earning free money from the interest if you were to open a business savings account.
Now let’s look at the next most logical thing.
How To Open Up A Business Savings Account
Of course there will be documentation that is required to open a business savings account, much like there is to getting business loans. Nevertheless it will vary for a few factors. One factor is the type of business opening up the account, is it a sole proprietor or a corporation. A sole proprietor is easier and normally requires just a Tax ID and Social Security.
However, corporations can require more documents such as the articles of incorporation and board meeting minutes. It could also vary from bank to bank and state to state.
It is best to check with the bank about what documents are required to open a business savings account. By opening up a business savings account you can start to receive the benefits listed above for your business.