There are roughly 26 million businesses currently operating in the U.S., and in any given year, half a million new businesses open their doors for the first time, according to data compiled by Statistic Brain. With this level of entrepreneurial spirit evident through the country, it's no wonder new business owners are working at a breakneck speed to set up shop and bring their ideas to fruition. But commonly lost in the rat race are the basics of proper financial management. And as any revenue-minded business leader will tell you, if you can't cover your basics, you can't run a business (at least not long term). One of the primary steps to take when starting a new company is to separate personal and business checking accounts immediately and to stick to these boundaries accordingly. Here's why:
Soothe tax headaches before they start
Scared of an IRS audit? Dreading tax season every year? Unsure whether to outsource tax preparation? These pain points are felt by millions of business owners just like you. One of the easiest ways to get yourself in a financial mess is to stumble on your taxes; and one of the easiest ways to stumble is to improperly account and track personal and business expenses. Having two separate accounts helps keep cash inflows and expenditures cleanly delineated so there are fewer mathematical errors and reporting mistakes. Time and again business owners wait too long before gathering necessary paperwork and tax documents, leaving them little wiggle room if they uncover financial problems such as assigning expenses to the wrong account, paying employees/vendors/insurers with personal cash or falling behind on loan obligations. Outsourcing tax prep and accounting either through software or through a third party can clear up these confusions and help you focus on what's truly at stake: your financial future.
Keep it simple for your sanity
As a business owner, you're already juggling a million daily tasks, like managing vendor contracts, networking with other entrepreneurs, making hiring decisions, funding new ventures, streamlining customer service requests, improving product offerings and much, much more. Allocating cash to the proper business or personal account means you have one less item on your agenda. Every minute spent tracking down inventory slips, outstanding bills, labor expenses and other records is a minute lost to competitors. And when under pressure, it's easy to misappropriate capital or use the wrong card to cover costs - if you didn't know you were doing this in the first place, then how do you expect to discover this problem later on down the line? Your sanity is crucial to keeping your head in the game and focusing on revenue-generating actions that can help your business prosper. With the assurance of having your backend operations squared away through sound business and personal banking practices, you can roll out new market strategies and identify avenues to outpace competitors.
Benefit from account- or card-specific perks
Just as every savings account comes with small perks, so too do personal and business banking accounts. Through Farmers & Merchants State Bank, business owners have access to three distinct business account options complete with free debit cards, online banking and low fees. Additionally, these accounts can be used to improve credit stability and financial portfolios, making you a stronger candidate for future business loans or lines of credit. These benefits differ from conventional personal accounts which feature their own perks typically on a smaller scale. The only way to capitalize on all of the benefits offered is by opening up the exact types of accounts you need for everyday operations, both personally and professionally. To ensure your business is one that survives its first-year hurdles, focus on proper financial management and speak with your local Farmers & Merchants State Bank rep today.