business bank account is essential for a large number of working Americans today, including small business owners, contractors, and sole proprietors. You may think it's easier to put all your personal and business assets in the same account, but doing so can significantly complicate things, especially come tax time. Keeping your personal and business finances separate will simplify your life and save you headaches in the future.
You could be a freelancer, a side hustler, or a rideshare driver. In all of these cases, you are a small business owner, contractor, or sole proprietor with taxable income. A sole proprietor owns their business and is entitled to all its profits, while also being liable for it. These scenarios will require you to keep your finances organized with receipts, invoices, and monthly statements.
If you have have a business bank account, you could end up paying less in taxes, prevent getting audited, and deal with less paperwork. From receiving and sending payments faster to streamlining your operations and tax preparation, here's why opening a business bank account could simplify things for you.
Why You Need a Business Bank Account as an Entrepreneur
A Business Bank Account Makes It Easier to Accept Payments
A recent study by Wasp Barcode Technologies shows that 60% of small business owners feel they are not very knowledgeable about accounting and finances. One reason for these statistics is that entrepreneurs don't have the tools to manage their finances properly. A business bank account provides small business owners with the right tools to organize their finances seamlessly. Think, for example, about how many transactions you process every month. This type of account gives you more options for accepting transactions as you can accept checks, credit card payments, and more. Such an account makes it easy to unify these transactions and manage them all from the same place.
More Transaction Options Gives Your Business More Flexibility
And if we're speaking about credit card payments, research shows that consumers spend about 12% to 18% more when paying with cards than cash. This stat showcases the importance of having an account that accepts credit card payments to give you more income opportunities and convenience for customers. Business accounts accept credit card transactions, but personal accounts often do not. Having these options also helps your business look more professional. If you are able to accept a variety of transaction types, you will give off an air of legitimacy. Doing so will increase the chances of getting repeat customers.
Less Paperwork Keeps Your Operations Nimble
A report shows that nearly half of millennials are freelancers, suggesting the future may be in small business. The same research finds that the number of freelancers in the U.S. may surpass other workers by 2027. And to keep your freelancing operations running smoothly, having business banking solutions are vital.
It's a hassle to create invoices manually, deal with paper receipts, and sort through transactions one by one. A business bank account solves all of these issues. You can automate the process of creating invoices and receipts with the right business banking option. Plus, it's easy to look at your monthly freelancing statements if you have a business account, reducing your paperwork considerably.
Less Taxes Equals More Money for You
The Wasp Barcode study finds that 52% of small business owners feel they may be paying too much in taxes. One of the most common reasons for overspending is filing your taxes wrong. And if you are not organizing and managing your business finances to a tee, there's a good chance you are overspending in taxes. A business bank account can help you avoid this issue with automated monthly statements. Besides, this account makes it easy to keep track of your business expenses, which you can deduct once you file. By subtracting these expenses, you will put more of your income back in your pocket.
Other common issues that small business owners have with taxes are underpaying, or filing their income wrong. The IRS is no joke, so make sure you open a business bank account to avoid getting audited. After all, you're running your business as best you can, and it's only fair you get to keep what is rightfully yours.
There are plenty of reasons why you need a business bank account. Whether you're an entrepreneur learning to manage your finances, a freelancer looking to reduce paperwork, or a contractor seeking to save on taxes, this account is the right choice for you. We believe every single one of you should open a business account and fulfill your American dream with as little resistance as possible. See why thousands of entrepreneurs choose Novo for their business banking needs, apply today!