Why have Business Banking Account?

[lesnar]

I'm not familiar with business accounts. But i'm wondering why it is required to have a Business Account? Can't you just open a personal banking account and use that for your business?

[wheel]

Depends on how you're getting paid. If you're acting as a sole proprietor and people are writing cheques payable to you personally, then you might be able to get away with it. If you're receiving payment payable to your business name then the banks won't likely cash the cheques through your personal account

Same goes for paying invoices - do you want to be paying business bills using personal cheques?

But even if you can get away with it somehow - and it will likely be too difficult to be bothered with IMO - the real problem is that you must keep your business and personal banking information discrete. Do not comingle your business and personal funds! Even if you have to do something that seems bizarre like writing yourself a cheque to your personal account to 'pay' yourself. Keeping business and personal funds 100% seperate is extremely important (more than you might think) and that alone is justification for keeping a seperate business account.

[Drew_W]

There's a Small Business forum whre this thread should be.

In essence, there are a few reasons:

1) Bookkeeping. If you get audited, it's easier to show what went where, etc. Exactly as mentioned above, keep personal and business separate.

2) Some credit card merchants won't let you have an account without a proper business account.

[coolspot]

I'm not familiar with business accounts. But i'm wondering why it is required to have a Business Account? Can't you just open a personal banking account and use that for your business?


If you do business in another name (i.e. My Company.com) you can't cash it through a personal account (names don't match)

Book keeping - it's easier if your personal/business transactions are separate

Security - if you have employees you don't to give them access to your personal account ;)

Bankruptcy protection ... if you're a corporation I believe creditors can only go for the money in your business account but not in your personal bank accounts.

[AlexElder]

also, Regardless of any of the above, if a bank knows you are using a personal account for business transactions they will tell you to open a business account or close out your account. I believe its to do with some sort of regulations regarding business transactions and operations.

there are a lot of government issues as well. it could trigger an audit on you or your business unless its a sole propietorship.

[Octavius]

If you do business in another name (i.e. My Company.com) you can't cash it through a personal account (names don't match)

Book keeping - it's easier if your personal/business transactions are separate

Security - if you have employees you don't to give them access to your personal account ;)

Bankruptcy protection ... if you're a corporation I believe creditors can only go for the money in your business account but not in your personal bank accounts.

The above couldn't be more accurate. If things go belly up for your business and you find yourself between a rock and a hardplace for debt that you cannot pay off, you will be held personally liable for ALL DEBT. If the court cannot decifer what is business and what is personal, then they will assume that you MEANT to take on that higher standard of risk, and thus, will have to pay the debt off completely, even if you are no longer in business.

The above also applies if you have an incorporated company, and you use personal credit cards or your personal funds to pay off company debts. If the court sees that the fine lines between yourself and your business have turned into a fuzzy outline, they will hold you responsible for that debt.

DO NOT MAKE THAT MISTAKE. TRUST ME, IT IS NOT WORTH IT. SPEND THE EXTRA FEW BUCKS, INCORPORATE, AND KEEP YOUR EXPENSES/PAYMENTS SEPERATE.