Don’t Make These Mistakes When Opening a Business Bank Account
One of the best tools you can have for managing your business is a business account. As a small business owner, this allows you to organize your finances, which leads to better decision making and budgeting. Of course, as simple as this may seem, setting up a business bank account needs to be done correctly. Additionally, it takes effort to maintain it, or your efforts will have been for nothing. Understanding these common mistakes will help you avoid them.
Setting Your Account up Correctly
The simplest mistake that can cause significant problems is providing incorrect information during the setup process. Alternatively, missing information or paperwork can slow the process down. Make sure you understand the specific and unique requirements that your bank has. Because each bank has different requirements and different policies, you should also take the time to choose the bank that would be best for you. Finally, remember that as a small business owner, you need to use your Federal Employer Identification Number to set up the account, rather than your personal Social Security Number.
Think carefully about check-signing authority when you are setting up your business bank account. In cases where there are more than one small business owner, many business choose to require checks to be authorized by both staff members as a security measure. There is no right option, but be sure to think this over before you head to the bank. You also need to make sure all information is correct on the company checks you have printed. In most cases, the business’ legal entity name needs to appear on the checks, rather than yours or anyone else’s personal name. This is especially true if you have a partner. Additionally, take the time to make sure the bank’s electronic check ordering and printing is compatible with your accounting software.
Maintain Your Account
Finally, make sure your business bank account stays above the minimum balance at all times. This is the simplest requirement for maintaining your account, but many business owners still fail in this regard. If the balance falls too low, you may face unnecessary fees or even have the account closed entirely. As always, each bank will have differing policies when it comes to minimum balance, so you need to ask about it when setting up your account. Then, take the minimum balance into account when budgeting so you never even approach the limit. Keeping a buffer of a few hundred dollars is a good business practice.