December 14, 2015

Are you using your personal bank accounts for your small business?

Whether you've started a multi-million dollar company or you are working from home to get your dream off the ground, there are many reasons for you to keep your business finances separate from your personal finances. Small business owners still make the mistake of using the same account for convenience, which in return can affect your legal liability. In fact, setting up a business checking and savings account are one of the first steps you should take when starting a business.

Tax Advantages: Regardless of where your business is being run, strictly from home, online, or in an office building, a separate banking account will help you take advantage of the taxes and avoid unnecessary hassles. When it comes to tax season, you will have to file your business income and expenses separately from your personal transactions. When these are all in the same account it can be difficult and time consuming to filter out the ones you are looking for. For those with a small business running from home, the IRS has rigorous rules about what you can claim as "business expenses." If you use your personal account, the IRS may frown upon your deductions, even though they are legitimate expenses.

Credibility: Besides avoiding IRS issues, having separate accounts helps to establish your credibility. When a client receives a check from your personal account, they may not take you as seriously as you would like them to but, when they receive a check from your business, it looks more professional and gives them a sense of confidence in your business.

Employee Empowerment: The weight of making deposits, mailing checks, and signing receipts can be a lot for one person to handle. One great benefit of having a separate checking account for your company is to be able to delegate these tasks to some of your most trusted employees. Your account can have multiple signers to help ensure all payments are made on time.

Growth: While you are starting with a small business, expansion is always on the horizon. It is important for your business to establish connections with trusted advisors from the early stages in order for them to help you reach your goals. LNB offers a wide range of both checking and savings account services for your business. No matter what your business needs are, financial advisors are available to create a tailored and convenient banking solution for you.