While it is possible to operate a Limited Liability Company (LLC) through a personal bank account, it is highly unadvised. There are many reasons why having a separate checking account is best for maximizing the potential of your business. Here are 5 reasons why opening a business checking account is the right move for your LLC:
1. Helps protect your limited liability
Limited liability protection is one of the benefits of forming an LLC because it helps keep your personal finances safe while running your business. Combining your personal transactions and your business transactions can put that protection at risk. Creating a separate account for your business funds prevents any sort of mix-up from occurring.
2. Allows you to accept different forms of payment
Customers rarely make purchases with cash nowadays. To make sales, you’ll likely need an account that can accept card payments, electronic transfers, and ACH transactions. Personal bank accounts do not have the provisions to receive those kinds of payments. If you want to maximize your profits, it is vital for your LLC to have a business checking account with these features.
3. Makes bookkeeping easier
Having your business finances in their own account makes it easier to know which numbers are relevant when calculating what you’ve earned, what you’ve spent, and what’s tax-deductible. This saves you or your bookkeeper time in the bookkeeping process. Some business accounts may even include digital bookkeeping tools to make the process of bookkeeping even easier. For example, each Innovator Business Checking account comes with a free Autobooks membership built into the Grasshopper mobile app and online banking, which offers automated bookkeeping to help business owners generate reports and reconcile transactions.
4. Makes tax season easier
Tax season can be an intimidating time for LLC owners. Having a separate account for your LLC makes your taxes easier to navigate by having all of your relevant transactions in one place. This can also help to lower your tax bill since it becomes easier to determine which expenses are tax-deductible.
5. Provides professionalism & credibility
When you have a business account, your LLC business name will be what appears on payments, which will help you to appear more professional to vendors or suppliers. It also helps you to appear more credible to potential customers, which can influence their spending decisions.
By Michaela Lenahan in Business Checking