Posted on October 17th, 2023

When you're running a business, managing your finances is key to long-term success. 

One of the best ways to do this is by opening a dedicated business bank account. Not only does it help you keep your personal and business expenses separate, but it also plays a vital role in your business funding options. 

Bank statements, which you receive through this account, serve as a financial record that can be crucial for various aspects of business management. 

From accounting to securing loans, these statements are more than just pieces of paper. 

In this blog post, we'll explore five compelling reasons why your business absolutely needs a bank account and should keep track of its bank statements. Whether you're a startup looking for funding to start a business or an established company aiming for growth, this information is for you. 

So, let's dive in and find out why a business bank account and its accompanying statements are non-negotiable assets for your business.

Reason 1: Simplifies Accounting and Tax Reporting

Having a business bank account separate from your personal account is a game-changer when it comes to accounting and tax reporting. It streamlines the financial aspects of your business, making it easier to keep track of income and expenses.

Easier Financial Management

When all your business transactions are in one place, it's much simpler to manage your finances. You can easily see what's coming in and what's going out, helping you make informed decisions.

Accurate Tax Reporting

Come tax season, you'll be thankful for your business bank account. Bank statements serve as a record of your transactions, making it easier to file accurate tax returns. This can also help you avoid penalties and potential legal issues down the line.

By keeping your business finances separate and well-documented, you're setting the stage for easier accounting and more accurate tax reporting. This is not just good practice; it's essential for the financial health of your business.

Reason 2: Builds Business Credit

A business bank account isn't just a place to store your money; it's also a tool for building your business credit. Having a good credit history opens doors for your business, especially when it comes to securing loans and other forms of financing.

Establishing Credit History

When you have a business bank account, you start to build a financial history for your company. Regular transactions and positive balances contribute to a credit profile that lenders look at favorably.

Access to Bank Statement Business Loans

One of the types of loans you can get with a solid business credit history is a bank statement business loan. These loans rely on your bank statements to assess your eligibility, rather than just your credit score.

By focusing on building your business credit, you're not only making your company more appealing to lenders but also increasing your options for types of loans, including bank statement loans.

Reason 3: Eases the Process for Business Funding

If you're looking to secure funding for your business, having a business bank account is often a must. Lenders want to see that you have a separate account for your business transactions as it indicates professionalism and makes it easier to assess financial health.

Prerequisite for Many Loans

Most lenders require a business bank account for you to qualify for any kind of business funding loans. It's a basic requirement that shows you're serious about your business.

Types of Funding Available

There are various ways to secure funding for your business, from traditional loans to more modern options like crowdfunding. However, one of the most straightforward options is a bank statement loan. If you're wondering how do bank statement loans work, they are loans that are primarily approved based on the income shown in your business bank statements.

By having a business bank account, you're not just meeting the basic requirements set by many lenders; you're also opening up a range of options for business funding. This is particularly important for small business funding or if you're looking for funding to start a business.

Reason 4: Enhances Credibility and Professionalism

Having a business bank account doesn't just make your life easier; it also sends a strong message to your clients and potential investors. A separate account for your business dealings shows that you're serious about your venture and committed to maintaining a professional image.

Boosts Client Trust

When clients see that you have a dedicated business account, it instills a sense of trust. They're more likely to believe that you're running a legitimate operation, which can lead to more business and better relationships.

Attracts Investors

If you're looking to attract investors, having organized financial records is a must. Bank statements can serve as proof of your business's financial health and growth potential, making you a more attractive investment opportunity.

By enhancing your business's credibility and professionalism, a separate bank account and well-maintained bank statements can go a long way in helping you attract both clients and investors.

Reason 5: Streamlines Expense Tracking and Budgeting

One of the most practical benefits of having a business bank account is the ease with which you can track expenses and create budgets. Knowing where your money is going is crucial for any business, big or small.

Simplifies Expense Tracking

With a business bank account, all your transactions are in one place. This makes it easier to review your expenses, identify trends, and find areas where you can cut costs.

Aids in Budgeting

Bank statements provide a detailed record of your income and expenses over a specific period. This data is invaluable when you're planning a budget or forecasting for the future.

By streamlining the process of tracking expenses and creating budgets, a business bank account serves as a valuable tool for financial planning and management. This, in turn, helps you make smarter decisions that contribute to the growth and success of your business.

What Do You Need to Open a Business Bank Account?

Opening a business bank account is a straightforward process, but it does require some preparation. Knowing what you need in advance can save you time and hassle.

Required Documents

To open a business bank account, you'll typically need identification, business licenses, and an Employer Identification Number (EIN). Some banks may have additional requirements, so it's best to check beforehand.

Credit Check

Most banks will also perform a credit check as part of the application process. This is another reason why having a good business credit history can be beneficial.

By gathering the necessary documents and information, you can make the process of opening a business bank account smooth and hassle-free.

How to Get and Keep Bank Statements

Bank statements are crucial for many aspects of running a business, from accounting to securing loans. But how do you get these statements, and how long should you keep them?

How to Obtain Statements

Most banks offer electronic statements that you can download directly from your online account. If you prefer paper statements, you can usually request them to be mailed to you.

Record-Keeping Duration

As for how long to keep bank statements, it's generally recommended to keep them for at least seven years. This ensures you have the financial records needed for tax purposes or in case of an audit.

By knowing how to get bank statements and how long to keep them, you're taking important steps to maintain accurate and accessible financial records for your business.

Conclusion

In summary, having a business bank account and keeping track of your bank statements are essential practices for any business. They simplify accounting, help build credit, ease the process of securing business funding, and enhance your business's credibility. Plus, they're invaluable tools for expense tracking and budgeting. If you're looking for business funding loans or other ways to secure small business funding, having a business bank account is often a prerequisite.

Interested in learning more about how to secure funding for your business? Check out our Business Funding service to find out how we can assist you in funding a small business or even funding to start a business. 

Feel free to reach out or get in touch at (305) 404 1422 or [email protected] for more information. We're here to help you succeed.