Business vs Personal Accounts; What You Need To Know

When starting your own business, it can be tempting to jump right in and get things rolling. However, you might find yourself in trouble down the road if you mix personal accounts and business accounts.

If you are operating as a partnership, company or trust, you’re legally required to use a business account for commercial purposes. If you are a sole proprietor, you will still benefit from having a separate business account. Setting up your company properly in this way can improve your company’s professionalism by:

Tracking incoming and outgoing funds

Funds should always be clearly defined as to where they come from and how they are accounted for, and that can be difficult to do when you end up using your personal accounts for business purposes or vice versa. Having a business banking account can make it easier to track deposits and withdrawals.

Making and receiving payments

A BOQ business debit card can make automatic payments easy and provide the flexibility you need to transact business smoothly. A business banking transaction account allows you to receive credit and debit card payments seamlessly and securely. Everything can be accounted for, and your personal accounts won’t have to be involved.

Keeping your bookkeeper happy

When you’re able to simply hand off your business banking records to your bookkeeper, their job is infinitely easier than if they have to parse through personal and business accounts to figure out where your company money is from and where it’s going. Less hassle, less hours to pay an accountant for and less likelihood of a mistake that could get your fledgling business in trouble legally.

Convincing customers that you are legitimate

If you’ve ever bought a product or service and been asked to make payment out to an individual, you know the niggling unease of such a transaction. By having a business banking account, you can instil trust that your business exhibits consummate professionalism. It’s a simple way to ensure your customers feel comfortable doing business with you. When your banking information and business name match, it’s good for branding.

Simplifying your annual taxes 

Trying to claim business tax deductions when you only have a personal account can land you in hot water with the tax office. So can running business money through your personal accounts and vice versa. Utilising a business bank account can help keep things crystal clear and reduce the chances of misunderstandings or miscalculations. A wall of separation between personal and business accounts protects both private and corporate funds.

Reducing your personal liability

If you use a personal bank account for business purposes, you are responsible for showing exactly what each transaction was for and marking it as a personal or business expense. The chances of human error are high, and you could end up mismarking a transaction and instantly conflating your personal and business finances. By having a business banking account, you can ensure there won’t be any confusion as long as you never use your account for personal reasons.

Bottom line: Setting up a business banking account makes sense, whether you’re legally obligated to have one or not. The benefits far outweigh any fees and can save you money in the long run.

Is it time to get a business bank account? Why not stop into your local BOQ branch and talk to one of our specialists about business banking today?