Having a savings account for your business can be extremely beneficial. When it starts getting hard to keep your funds separate and figuring out which goes where, then it’s probably time to get a business savings account.
I’ve had clients who don’t have business accounts and keep everything all lumped together. It’s such a disaster in many areas.
There are many advantages:
1. Good records.
Do you withdraw and deposit your business money into your personal accounts? This isn’t always the best idea because you are mixing different money together and this can be hard to keep track of. Filing taxes at the end of the year might be a disaster. Looking for a business savings account can be extremely beneficial for you and your business.
2. Filing taxes.
Continuing from above, filing your taxes will be MUCH easier. Instead of scouring through tons of receipts and invoices, you can look at one account and no exactly that it is from your business and your business only. Getting a business account is good in this situation as well.
As said above, it’s always a disaster when my clients have everything limped together. Financial forensics analysts always have to be hired because the IRS is not a huge fan of when everything is all in one account because it is hard to tell who is being honest about different expenses and income amounts.
3. To keep everything professional.
Honestly, keeping everything separate is more professional than lumping it all together with your personal account. Having clients and customers pay you to your personal account will not seem as professional in their eyes as if you had an actual business account (this is especially true if this client is new to you).
Drop that Debt says
I keep mine all in one account, but that's because I have no business expenses, just freelance income that gets put into my bank account each month via paypal. However, if I do start to grow my freelance business, I am definitely going to keep things separate so I can track more easily.
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Sean@OneSmartDollar says
I have a business savings and checking. I keep everything in savings until I need to move money for payroll.
Kristine@TheFoleyFam says
I completely agree on keeping it all separate! I'm such a hypocrite tho, because I have yet to open up {another} business account. I had one when we lived in Wisconsin, but since moving to Utah I just never opened up a business one and having to keep it all straight AND more importantly legit has been HORRIBLE! This year will be sucky once again filing. Open Biz Acct is on the top of my list for tomorrow!
thethriftyspendthrift says
My husband and I are starting are blog that we want to make some side income from, though I'm not sure how long it'll take to really get started. I want to keep everything separate but right now, there is nothing, so it doesn't really make sense.
I think the only thing I will do for now is purchase a ledger book, write everything down and keep receipts within that. Then if we get anywhere and/or start to grow, we'll transition into a separate account.
MoneySmartGuides says
Right now, everything goes through my personal checking account and then I transfer it into a separate savings accounts. I have a spreadsheet where I keep track of everything in detail. This only works because my income at this point is not significant. When it does grow, I will most certainly open a separate account so that things are more cut and dry and there is little chance for error or confusion.
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Brian says
Ugh, co-mingling assest could lead to major problems if you were to lose a lawsuit because it would be much harder to distinguish between what was a personal and what was a business asset.
Becky says
I'm actually working on this now, as I prepare to launch my photography business in January. The minimum requirement for a business savings or checking account is what's preventing me from opening one right now. The place we want to open a business account requires a minimum balance of $1,500, and I haven't come close to earning that yet. We'll get there…
Canadianbudgetbinder says
I don't have a business but you can bet I'd keep everything separate so I can track all of the expenses. We are very critical of dollars and cents and where we are spending them that it would be imperative for us. Mr.CBB
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Jason Clayton says
I have separate bank accounts for my business. This is actually very important if you have something other than a sole proprietor (LLC or S Corp). If you don't have separate accounts, lawyers will easily be able to come after you personal assets without them being separated.
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moneyaftergrad says
I've been considering setting up a business account but I don't really understand the cut-off. Like, when can you justify it? How much should your side business (blog) be bringing in to really make it make sense to have a business account?
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kathy says
i'm self-employed (not through blogging but my actual career) and i keep everything separate from bank accounts to a separate business credit card… makes accounting SO much easier. my accountant sifts through all of that though, but i still keep good, clean records because i want to reduce any risk of a mix-up!
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mika jones says
Yes I agree. Dont mix personal accounts with business accounts to fully determine the success of the business.
Joe Morgan says
I'm a fan of separate accounts for income, and a separate credit card (rewards, of course 😉 ) for spending. That way, I get a monthly and yearly report of spending just for the business.
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