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Separate banking accounts are a critical part of business startup

On Behalf of | Dec 5, 2019 | Entrepreneurial Law |

When you decide to start your own business, you have to invest a lot of your time and money into making your dream a reality. From the first moment you start actively pursuing your entrepreneurial concept, you should take steps to protect yourself and your finances. Opening a business bank account as soon as possible is one of the most important steps to protect your future financial well-being.

A business banking account makes it easier to track your costs

The first and most obvious reason you want a business bank account is so that you can accurately track exactly how much money you have invested and how much is coming into the business. If you commingle business funds with your personal accounts, you will have to engage in more arithmetic just to determine whether the business is in the black for the month. By separating the accounts, it is a straightforward process to analyze the current financial situation of the business.

Commingling business and personal assets leaves you vulnerable

When you start a business, you will have to make important decisions about what kind of business you want to run. Whether it is a partnership or a limited liability corporation, the structure of your business is one way that you protect yourself. Creating a separate legal entity protects you from problems in the event that the business fails or has liability claims brought against it in court.

However, even with a proper business structure, your personal assets could wind up vulnerable in certain situations if you have commingled business funds with personal funds. The creation of a business bank account will make it more difficult for individuals or creditors to try to acquire your personal assets in a claim against the business.