It is a given fact that it’s never a good idea to mix personal money with business funds. After all, it’s easier to monitor the cash flow of your business if the funds are in a separate account. It will also help your accountant to claim expenses as business deductions, especially when dealing with the IRS. But before you go to the nearest bank, read a few mistakes small entrepreneurs make when opening a business bank account for the first time and how you can avoid them.
Mistake #1: Failure to Plan Check-Signing Authorities
Does your company include a partner or significant staff members? Will your business checks require one or multiple signatures? When your business is growing, there will be times that you can’t stay in your office the whole day just to sign checks. So, it is better to designate certain staff members or a partner who can sign the check on your behalf, before opening a business account. This way, you’ll avoid the headaches of trying to make significant changes in your account later.
Mistake #2: Wrong Company Name on Checking Account
Some small entrepreneurs open a business checking account using their “doing business as” (DBA) name instead of their business entity’s legal name. That mistake may pose a problem on payment transactions, as it may confuse your vendors or customers. It is vital that you only use one business name in all of your bank accounts.
Mistake #3: Selecting the Wrong Bank
Though the neighborhood bank is accessible, it is best to look for a bank that specializes in business accounts. After all, not all banks offer services ideal for businesses, such as a commercial loan, risk management, and business credit cards. If you’re planning to open a business bank account in Bloomington, for instance, make sure that you shop around for the best business bank.
Now that you’ve learned from these mistakes, you are more prepared in opening a business bank account. Don’t be afraid to ask questions, in case there are things clear for you. Also, make sure you bring all the requirements for opening a business account so you can complete this task as quickly as possible.