Getting your commercial checking account in order is vital for a business to succeed. One study by U.S. Bank found that nearly 82% of businesses fail because of problems with cash flow. This statistic points to an issue with accurate recording. Therefore, it is essential for small or beginning businesses to have impeccable bookkeeping practices.
A Commercial Checking Account Is Not a Personal Checking Account.
A commercial checking account is an account at a commercial bank held by a business or corporation. Unlike a personal checking accounts the Federal Reserve forbids the account holder to receive interest on their money. The bank offers credits instead, which have a different set of benefits. However there are other differences that have a bigger impact to consider.
Keeping Assets Separate: Why a Small Business Must See Their Personal Money and Business Money as Separate Entities.
It’s important for a business owner to keep their personal and business assets separated to avoid problems. A business or corporation is seen as its own entity by the law if certain measures have been taken. One of these measures is to have a commercial checking account. If the business had issues with cash flow, discovering the culprit would be simpler and less intrusive with a business account. Doing so also cuts down on suspicion of improper practices.
Online Banking Makes Sense For Your Business Account Too.
Accurate recording in cash flow analysis is critical when determining a company’s financial standing. One way to achieve this goal is to use online banking to assist in keeping track of financial transactions. This can also be a good way to keep track of any limits or fees a commercial bank may impose. When choosing a bank, take note of the limits on daily transactions and deposits.
Good Visibility Requires Good Bookkeeping.
For a small business or corporation to have good visibility on their current financial situation, there must be a solid bookkeeping practice in place. It is important to note that clear financial records also protect a business in times of trouble. This could take the form of a dispute with a vendor, or be as serious as an audit. To avoid legal troubles, make accurate records a high priority.
Clearly, a commercial checking account is not the same as a personal banking options. For a business to succeed it needs to place a high standard on its bookkeeping as well as keep personal and business assets separate. It also doesn’t hurt to use an online banking feature.