Creating one or more accounts with a financial institution is an important step in managing a business’s finances. Loans, monthly account statements, and loan tracking are typical services provided to clients who create business accounts commonly used for business operations. As you prepare to open checking, savings, or investing accounts for your business, here are some tips to keep in mind.
Separate personal banking services from business accounts
Even if you have a small business, don’t mix personal and work accounts. Always keep your business financial accounts separate. The intertwining of personal and professional business transactions and accounts often leads to mismanagement of company funds due to confusion, recklessness or convenience. When the time comes, you’ll need clear and accurate financial statements for day-to-day transactions as well as tax returns.
Think of a credit union
The local credit union brings a more tangible approach to financial transactions in personal and business accounts. This is accomplished by limiting their scope to a specific city or region. For example, the Oceanside Credit Union will only do business with residents and businesses in North San Diego. Credit unions generally offer special low interest rates, unique account features, and seasonal offers that are not always offered at traditional banks. Find out how to use credit unions for bank accounts versus traditional banking features.
Keep accurate records
While financial institutions are generally trustworthy and reliable in managing business accounts, it is also important that business owners and managers keep track of their business accurately. Monthly statements should be checked, inconsistencies or issues reported immediately to the bank or credit union. Electronic or printed receipts should be routinely stored for future reference when needed. Account fees should be reviewed annually to ensure the correct amount is charged or reduced, if applicable.
Avoid unnecessary debt
Setting up financial accounts with local financial institutions is a valuable way to build credit and effectively manage business funds and accounts. However, businesses can be offered loans for no specific reason, often at reduced interest rates or with longer maturities. Business owners should be careful to avoid the temptation of affordable loans, unless there is a specific purpose for it. Ultimately, the loan will have to be repaid on time, which can lead to higher interest rates and delays in cash payments.
Simplify financial transactions
If possible, assign someone to oversee the company’s financial processes frequently, if not daily. This employee is responsible for processing deposits, writing checks, ordering company checks and a host of other financial issues that need to be addressed. Accounts should be audited at least once a year to ensure proper procedures are followed. In addition, it is important to ensure that financial performance is maintained using modern software and modern business practices. Any problem in the accounts can be discussed with the manager for a quick solution.
Business banking services play an important role in the success of a business. Take the necessary steps to create the right accounts, monitor them closely, and use them wisely to protect the company’s financial interests and reputation.
