Dos And Donts For Small Business Bank Accounts
Posted on: 24 February 2016
Opening a small business is not a walk in the park, especially when it comes to how to handle your money. Setting your banking up properly from the beginning will save you a lot of heartache in the future.
Do Open a Business Bank Account
One common mistake startup small businesses make, especially sole proprietorships, is to try to run the business with their personal bank account. You need to be organized, and it's nearly impossible when you're mixing business and personal expenses. In fact, it may be best to have separate accounts for different aspects of your accounting, such as revenue, payroll, or taxes.
Do Find a Bank That Serves All Your Business Needs
It may be tempting to go with the bank you know and have been dealing with for years, but your personal bank may not be the best choice for your business. Check out a few banks and what they offer. Ask business friends which banks they use and why.
Do Plan Check Signing Authorities
If you are a sole proprietor, you are best off signing all checks yourself. If you have one or more partners, you need to decide if you will require one signature or two, and who will sign for large amounts vs. small amounts. No matter what you decide, make sure that you see every check that goes out to creditors and suppliers. Businesses get robbed by trusted employees every day because the boss didn't keep an eye on his funds.
Don't Leave Vital Information At Home
Before you open your business account, find out exactly what paperwork is required. It's usually not very complicated, but new business owners often make the mistake of not having all their paperwork in order when they go to open their account. At the least you will need your social security number, a tax ID and general business information.
Don't Put the Wrong Name on the Checks
Another common error is ordering checks with the DBA (doing business as) name instead of your business entity's legal name. Due to protections against online banking fraud, this is important for setting up the ability to accept online credit card payments. You may also want to enable electronic check printing via your business accounting software.
While some of these things may seem like no-brainers, they are common mistakes that many small business owners make. Your money is the lifeblood of your business, so having all your banking ducks in a row is essential to having a successful small business experience.
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