Why you should open a business bank account

Are you tired of using your personal bank account for your business? Opening a business bank account is generally easy. Plus, your small business accounting system will also see benefits.  Read on to learn about five advantages of opening a business bank account.

Business bank account benefits for small business owners

Distinguish the business from a hobby

Make sure your venture is a legitimate business instead of a hobby. Otherwise, you'll be deprived of many tax deductions that only businesses can take.  The general definition of a business in the eyes of Uncle Sam is a venture whose primary motive is to seek profit. A business account helps bolster the legitimacy of your enterprise. Even if you're not profitable, this is a strong signal that you intend to be eventually.

Separate business and personal transactions

Opening a business bank account can improve your current business accounting system. When you co-mingle personal and business transactions, you risk poor record keeping. Even worse, you may increase your risk of an audit due to inaccurate business deductions.  A bank account specifically for business transactions acts as a barrier between business and personal transactions. This will boost the accuracy of your business accounting, as well as your annual tax return.