Establishing one or more business accounts at a financial institution is an important step in managing a company’s finances. Loans, monthly account statements, and credit monitoring are typical services provided to customers who set up business accounts that are routinely used for the company’s operations. When preparing to open checking, saving, or investment accounts for the business, here are a few tips to keep in mind.
Separate Personal Banking from Business Accounts
Even if your business is a small one, do not combine personal with business accounts. Always keep your company financial accounts separate. You should compare bank accounts to get the best rates for your different accounts. Intertwining personal and professional business transactions and accounts often lead to mismanagement of company funds due to confusion, recklessness, or convenience. You will need clear, accurate financial records for daily operations as well as tax filings when the time comes.
Consider a Credit Union
A local credit union brings a more personable touch to financial dealings in both personal checking account and business accounts. This is achieved by limiting their range to a specific city or region. For example, an Oceanside credit union will only do business with residents and companies located in the northern San Diego area. Credit unions usually offer special low-interest rates, unique account features, and seasonal offers not always offered at traditional banks. Check to see how using a credit union for business banking account options compare against traditional banking features.
Maintain Accurate Records
While financial institutions are generally trustworthy and reliable in managing business accounts, it is also important for business owners and managers to monitor account activity for accuracy. Monthly statements should be checked, with discrepancies or questions reported immediately to the bank or credit union. Electronic or print receipts should be filed systematically for future reference if needed. Account fees should be reviewed annually to ensure that the proper amount is charged or reduced when applicable.
Avoid Unnecessary Debt
Setting up financial accounts with a local financial institution is a valuable way to build credit and to efficiently manage company funds and accounts. However, a business may be offered loans for no specific reason, often at reduced interest or longer repayment terms. Business owners should be careful to avoid the temptation of available credit union personal loans unless there is a specific worthwhile purpose to apply for one. Ultimately, the loan will need to be repaid in a timely manner, with possible interest hikes and late payments leading to cash penalties. The overall need for borrowing business funds should be thoughtfully evaluated before taking out a loan.
Simplify Financial Transactions
If possible, assign one person to oversee the company’s financial processes frequently, if not daily. This employee should handle deposits, writing checks, ordering company checks, and the full range of other financial matters that need to be handled. The accounts should be reviewed at least once a year to ensure proper procedures are followed. In addition, it is important to ensure that the financials are maintained by using up-to-date software and current business practices. Any glitches in the accounts can be discussed with the manager for prompt resolution.
Business banking plays an important role in company success. Take steps to set up appropriate accounts, monitor them closely, and use them wisely to protect the company’s financial interests and reputation.
