A small business checking account is an account held by a bank on behalf of a business, which acts as a custodian for the funds that are drawn from the account. The bank guarantees to honor those checks and clear any deposits. The most important difference between Small Business Checking Accounts and the personal kind is that this account allows businesses to write checks to pay off their bills and get cash through ATMs just like individuals do. This is an ideal way for small-business owners to get their money when they need it fast.
Benefits of having a Small Business Checking Account
Checks for payment
While personal checking accounts are paid via direct deposit, a small business account offers the capability of writing checks to pay bills. The business owner can either pay them directly or ask the bank to pay them on his behalf, this is generally done through a process called pre-authorized check. It is normally done by the company’s accountant or bookkeeper, who are charged with keeping tabs on the company’s finances and pay any bills that have been set up beforehand to be paid automatically.
Using the bank’s ATM
Another benefit of a small business checking account is that it allows for the use of the bank’s ATMs. This can reduce costs, because there are no automatic monthly fees that are charged to keep up with the minimum balance requirement on a personal checking account. This means that banks will not charge fees each month for withdrawals from an ATM, but personal checking accounts do have this fee attached to them.
By eliminating these fees completely, you’ll also be able to make more deposits and withdraw money from your account as needed with no additional charges.
Another benefit of a small business checking account is that it requires significantly less paperwork than the average personal account. Because it is a company’s bank, there are no personal information required to sign up or open an account, this can make it much easier for business owners to complete their required filings.
This also includes the ability to pay bills electronically, which eliminates the need for regular paper statements and stamps required on personal accounts. It also provides more flexibility over time when dealing with accounts at other banks that are now beginning online banking services. This saves time and hassle when revising financial information and reconciling it with accounts from other banks.
Not a Personal Account
One of the biggest benefits of a small business checking account is that it is not a personal account. This ensures that the funds deposited into an account will not be freely available to any other individual and also guarantees that the business itself legally owns them. This helps to protect businesses against potential tax liabilities in case of fraud or theft. The legal distinction between funds held in trust for individuals versus those held to maintain a corporation or LLC is important because it allows banks to hold the money in separate accounts, which means funds maintained for personal use will not be mixed with the company’s accounts.