Running your business is a full-time job–and more. But don’t let your endless to-do list keep you from paying attention to the bank accounts associated with your business. For one thing, you should definitely separate your personal and business finances if you haven’t already. And, even if you already have a business checking and savings account, you may be ready to earn more interest on your savings with a Money Market account or CD.

Keep reading to learn why “simplifying” with as few bank accounts as possible isn’t always the best move. In fact, it’s often in your best long-term interest to work with an experienced business banker to choose and open the right business accounts to support your growth goals. 

Separate business and personal finances

Mixing business and personal finances can create confusion, complicate accounting, and make it challenging to track business expenses accurately. If any of your personal accounts are tied into your business finances, it’s in your best interest to replace this personal bank account with a dedicated business account. Having separate bank accounts for personal and business use makes it easier to keep track of business expenses and ensure they are all accounted for. This separation also makes tax season more manageable and less stressful, as you’ll have all the necessary records and documents in one place.

Other benefits of separating your business and personal finances include:

• Track your business cash flow easily and understand how your business is doing at a glance.
• Make accounting processes and tax time easier
• Simplify the process of identifying potential tax write-offs.
• Protect your personal assets–such as deposit accounts, retirement investments, and your home–from legal liability.
• Your business gains credibility from using checks with your business name and address on it, as well as business credit cards (which can also make your accounting more efficient).
• Establish a relationship with a business banker so you will have someone who already knows you when you need financing in the future.

Streamline accounting functions

As mentioned above, maintaining separate business and personal accounts for checking and savings, as well as credit cards, can help you streamline accounting processes.

If you use accounting software, you can connect your business bank and credit card accounts for a more efficient reconciling process as well as bill pay, payroll, invoicing, estimates, and more.

If you have a bookkeeper on staff, a dedicated business account still makes it easier to track income and expenses, accept payments, pay contractors and employees, and reconcile your business checking account.

It will also be easier to create the four financial statements that help you run your business and plan for the future: the balance sheet, income statement, statement of cash flow, and statement of retained earnings.

Finally, at tax time, whether you pay quarterly or annually, you’ll save time looking for the information you need to complete tax forms.

Manage cash flow and improve savings

Cash flow is one of the most important vital signs for any business. Optimize your cash coming in and speed up the time it takes to collect payment by maintaining multiple business bank accounts.

For example, your business can have a separate bank account for accounts payable and accounts receivable, making it easier to keep track of the money coming in and going out. Additionally, having an interest-bearing business savings account–or multiple savings accounts–for your business allows you to set money aside for a rainy day and future needs, which will prepare you for any future cash flow issues. 

Keeping better track of your business’s funds will help you make informed financial decisions and avoid the cash flow problems that can affect your business’s ability to operate effectively.

Explore savings accounts

When it comes to having multiple business accounts, at least one of them should definitely be a savings account. While you may start with a basic business savings account, as your business grows alongside your deposit balance, consider advanced options such as a Business Money Market account or Certificate of Deposit. 

The right business savings account is important for businesses to plan for the future, prepare for changes in the market, save for future goals, and more. With the recent market turmoil and economic uncertainty we’ve experienced, not to mention rising interest rates, a good savings cushion can help your business weather any storm.

When your deposit balances start to exceed $250,000, consider the Insured Cash Sweep (ICS) service and IntraFi® Network Deposits℠, which allows you to access multi-million FDIC insurance and earn interest on your deposits, all through a single banking relationship. This also means a single bank statement for your account, further streamlining your bookkeeping processes.

How does Cogent Bank help small businesses?

Is your business experiencing cash flow issues? Turn to the best bank for small businesses. Cogent Bank offers customized business banking solutions to help you achieve your goals for your business. Whether you are a new or seasoned business owner, our dedicated team of business bankers can help! Open a new business checking or savings account online or contact us to get started.

Check out our Electronic Data Interchange (EDI), which offers automated collection processes to help you accelerate payment and collection, operate more efficiently, enjoy greater flexibility, and save time and money. 

Cogent Bank is a Preferred Lender for the SBA, which means we can help you process your SBA loan application as quickly as possible.

We also offer a complete list of Treasury Management services including ACH Origination, ACH Positive Pay, Business Online Payroll, Check Positive Pay, and more. To learn more, connect with a Cogent associate. We will discuss your business needs and challenges with you, and help you find the solutions to move your business forward.

 The information contained herein is for informational/educational purposes only.  The views and opinions expressed in this document may be those of the individuals and may not necessarily reflect those of Cogent Bancorp and its subsidiaries and affiliates, or the entities they may represent. Content contained herein may be used in connection with the advertising and/or marketing of products offered by Cogent Bank or Cogent Private Wealth. The material is not intended to provide or substitute for legal, tax, or financial advice or to indicate the availability or suitability of any Cogent Bank product or service. You should consult with a legal, financial, tax, or other appropriate professional(s) for your specific needs and/or objectives before making any decisions.