As a small business owner, chances are you already know how important finances are to your business. You need to make sure you’re in a stable financial situation at all times, keeping a close eye on cash flow to maintain profitability and make better business decisions, but there’s one more vital ingredient you need to think about – your business bank account. Having a dedicated service is essential, but just why do you need one?
Well, the first and most obvious reason is that you need to keep your personal and business finances separate. It might seem like a small point, particularly if you don’t think your company’s established enough to warrant an entirely separate account, but it can make all the difference come tax time. You need to have a clear audit trail of all money going into and out of your account, not only being essential for cash flow management but ensuring all bookkeeping and accounting requirements (self-assessment, VAT returns etc.) are easy to complete. It’ll be easier to estimate the amount of tax you need to save too, avoiding the possibility of being caught unawares by a bill.
It’s all about being organised, but it can avoid the possibility of your personal finances being caught up in your business affairs too. This is something that’s particularly important to remember should your business (heaven forbid) default and owe money to creditors, because by keeping things separate your personal assets won’t be at risk of being swallowed up. It’s important to think about the various services a specialist account can offer too – overdraft facilities, for example, can prove essential for start-ups and can provide a valuable buffer when trying to get things off the ground, whilst preferential loan rates can often be provided as well. You’ll often find you can establish a good working relationship with the bank manager too, something that can make all the difference should you need to secure vital funding or grow your business.
Getting the right account may not initially seem like that much of a challenge or, indeed, that important, but it can actually be key to the success of your company. It can be difficult for a start-up to get off the ground without the services of a business bank account whilst improved organisation and a good relationship with the bank manager can make all the difference, so don’t go into it blindly – make sure to get a dedicated business bank account and you could have the kick start you need for your new journey.