Setting your business finances up right from the start means setting yourself up for success which is exactly why you need a business bank account. Whether selling your online course is your first foray into small business finances or not a business bank account can help you stay on track. That way, you can keep your business finances separate from personal finances making it easier to track your success, apply for funding if you ever need to, and do your taxes when the time comes.
Why you need a business bank account
There are multiple benefits to opening a business bank account as you grow your online course business. We’ll cover some of the biggest ones below.
Tracking your own business progress
Opening a business checking account will make it easier for you to have one place where you centralize your business finance. It’ll be easier to do your accounting and for you to keep track of your finances.
Simplify your business taxes
Opening a business bank account can help you simplify your business taxes at the end of the year. If you’ve already got an account designated for your business expenses, you (or your accountant) won’t have to spend any time separating out your personal and professional finances when tax season rolls around.
If you’ve got a business bank account you’ll more easily be able to keep track of business expenses and any possible deductions. Which makes it more likely you’ll get your taxes done efficiently and properly. And, it’ll keep your business records nice and clear in case your business is ever audited.
Business jargon doesn’t have to seem so obscure. Learn the basic business terms to know with our business finance glossary.
Establishing business credit
It’s no secret that having a stellar personal credit score can unlock all sorts of financing and opportunities. But the same goes for your business. And one of the ways to establish a business credit score? Opening a business bank account and getting a business credit card along with it. Then you can pay bills or any outstanding invoices on time and help boost your credit score and build a track record of good credit. Or if you’ve got any kind of business loan or financing you’ll need your business account to make payments towards that as well.
Easier to apply for funding, should you need it
Speaking of business funding, if you think you’ll ever need any you’ll also need a business bank account. Why is it important to have a business bank account when applying for funding? Well, your lender will need a place to put the funds they offer you. Plus, if you’ve already got an established relationship with a financial institution like a bank that offers business financing, they could be one of the first places you look for that funding. This can be extremely helpful in taking charge of your money.
Banks are sometimes more willing to work with businesses they already have an established relationship with. Plus when you apply for funding, you need to show the money your business is bringing in each month or each year. And you’ll want to be able to show your business history, and track record.
How to choose a business bank account
As with most things, choosing a business bank account won’t be a one-size-fits all scenario. You should shop around a bit and find the right one that best fits your specific business needs. Maybe that’s a business bank account with the same financial institution where you do your personal banking. Consider whether you want a physical bank location to go to or if you want an online bank. These are all important questions to ask yourself when comparing your options.
What to consider when choosing a business bank account
When choosing a business bank account, there are some factors to consider. Because you can’t be expected to know all things business, we’ve created a list of things to consider.
- Location – Do you need a physical bank location or will an online bank work for you?
- Minimum balance – Some bank accounts require that you have a minimum balance.
- Monthly or annual fees – There are banks out there with no monthly or annual fees for their business accounts.
- Other financial products offered – Consider whether you might want to also get a business credit card or whether you might apply for a loan at some point. Choose a bank that offers the other financial products you might need down the line.
- Integrations – If you use a certain bookkeeping software or accounting software, consider whether it integrates directly with the bank you’re considering.
- Customer service – Do you want a bank that offers personalized financial services? Do you need extra guidance from your bank? Consider the level of customer service you’re looking for from your bank before choosing one.
While it can feel intimidating, opening a business bank account for your business can be an incredibly important step in setting yourself up for success. Maneuvering your business finances can be hard— what with figuring out upsells, chargebacks, sales tax and more. We’re here to take some of the stress out of it where we can with Teachable Payments, but we always encourage you to seek a professional as well.
Why is it important to have a business bank account?
Having a business bank account is important for separating your business and personal finances. That makes it easier to do your business taxes, apply for funding, and establish business credit. Some business bank account can have low fees or no fees at all. Shop around to find the right business bank account for your needs before choosing one and consider the bank you use for your personal accounts.
Can I use my personal bank account for business?
While you technically can use your personal bank account for business, you shouldn’t. You should keep your business and personal finances separate as you start to make money online as a beginner. This will make it easier for you to grow your business when the time comes. Your business finances should be organized and consolidated in one place. Then when you have to file taxes, or if you need to apply for funding, you can easily find any information necessary. Or you can provide an accurate snapshot of your business finances when you have to.
What do I need to open a business bank account?
You should open a business bank account if you’re making income from your business, even if it still feels like a hobby. Then if it grows, you can have everything ready for that time. You’ll be helping future you by setting yourself up for success in setting up a business bank account now. As we mentioned, it can also help you build your business credit too. You might not think you need good business credit yet, but you don’t want to wait until you need it to start building it.
Editor’s note: This is not financial advice. Please consult your accountant or financial advisor on any financial decisions regarding your business or personal finances. Teachable does not provide financial advice and this should not be taken as such. This article is for informational purposes only and does not provide any legal or tax advice.