If you are a serial entrepreneur and you have more than one business to oversee, then one of the main complexities you’ll face is that of money management.
In this context, it can be helpful to have at least one separate bank account for each business. Let’s look at where this decision makes the most sense, and what benefits it brings to the table.
Legal Obligations Apply
Depending on the type of business and where it is based, setting up a bank account for it may be a requirement under law, rather than an optional aspect that you can either take or leave.
This doesn’t apply to every organization or in every country; for example, having a sole trader bank account in Australia is just a strategically sensible way to manage your money as a freelancer, rather than being a regulatory necessity.
Whatever the case, it pays to check the rules where you are careful, and follow them to the letter when managing your business’s financial matters.
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Convenience Is Key
Every type of business can benefit from having its own bank account, and entrepreneurs who try to keep all of the incomings and outgoings under control from their personal current account will quickly become overwhelmed.
It’s appealing from a convenience perspective above all else, as you’ll be able to track the flow of cash to the separate commercial entities in your growing business empire, as well as keep tabs on things like expenses and ensure you are able to file tax returns without facing an administrative uphill struggle.
Giving each business its own bank account, rather than orchestrating cash flow centrally, also matters in terms of how you are perceived by your customers.
If you issue invoices to clients which include a request to make a payment to a personal bank account that does not share the name of your business, it will look unprofessional. Conversely, if you have taken the time to set up an account that is unique to the fledgling company, it will instantly give it more credibility, and earn the trust of those all-important early customers.
Personal Liability Is a Factor
Another compelling reason to open an account for each business is that this minimizes the liability of you as the owner when it comes to the financial dealings of the organization.
You don’t want to be personally liable to repay any of the debts that the business builds up just because loans have been arranged using your own bank account, for example.
Additional Features Are Appealing
Business bank accounts are not just the same as bank accounts for individuals but with a fancier name; they usually offer all sorts of add-ons and bonuses which are specifically advantageous to commercial operations.
This can include the ability to offer in-depth analytics so that you can scrutinize your finances and get insights that might lead to policy changes and potential improvements to the way you run your operations.
It could also include support for advanced payment processing, as well as providing protection to your customers if one of your businesses has an eCommerce element to it, for example.
You could even receive payment cards that are fully branded with your business name, logo, and details, which again ties in with the professionalism that they convey.
The Last Word on Business Bank Accounts
You might find that each business in your portfolio not only needs at least one separate bank account of its own but multiple.
With the help of a finance specialist, you will be able to balance the books and get your accounts in order as an entrepreneur, so if you don’t have the skills yourself, call in the experts.