Running your own business? Find out why it is important for you to have a business bank account rather than relying on your personal one.
Starting a business is a thrilling, powerful, and fascinating experience for any young (or old) entrepreneur in Malaysia. There is so much to take in right away, from determining when a product or service will be available, to designing your next marketing campaign.
Opening a company bank account may not seem like a top priority amid all the “chaos” and never-ending tasks, especially if you can pay for business expenditures using your account, right? Not necessarily.
Separating your personal finances and business costs, whether you run a small business or a major corporation, can benefit you in more ways than one—no matter how inconvenient or unneeded it may appear. It can also help you save time and avoid getting into trouble.
A business account makes bookkeeping simple and gives you a clear picture of your financial flow. It also gives your clients, suppliers, and business partners a more professional impression. The business account allows you to make payments with simplicity as your company grows.
When acquiring financing, businesses with their professional credit profile do not have to rely entirely on the owner’s personal credit history; this creates a stronger credit picture and boosts their chances of being approved by a financial institution.
Opening a business account is not expensive or complicated (thanks to the established infrastructure for finance in Malaysia), and creating the correct accounts and structure for your firm from the outset can help you avoid future financial blunders.
Here are a few more reasons that may compel you into opening a business account.
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Too Many Transactions To Run Through A Personal Account
It may make sense for entrepreneurs in Malaysia to do commercial transactions using a personal account when starting out, and this may work fine initially. However, as your company grows, you will need to create a separate account for it. When the number of company transactions exceeds the number of personal transactions, you will know it’s time to make that decision.
It will be easier for you to handle your business if you have a separate business account. You can save receipts and write checks for spending in the account. It will be a lot easier to operate than if you tried to do everything through a personal account. There are a variety of commercial bank accounts available to assist you to keep your personal and business costs separate.
Maintaining Your Image
For the sake of your company’s existence and future, you must maintain a clean, polished image, like how you would dress for an interview for the job of your dreams.
Writing checks out of a personal account, no matter how little or large your company is, is not only bad for your image, but it may also cause people to take you less seriously. It may also harm your company’s brand and trustworthiness if your approaches appear shady.
If you have a business account, however, your company name will display on checks and other forms of payment, giving clients and consumers more confidence and trust in you because they know your company is legitimate. Because you haven’t yet established your company, maintaining and improving its image is critical to its success. Transparent and trustworthy bookkeeping communicates strength and confidence to customers and clients.
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Your Business Is Starting To Accept Credit Card Payments
This is the most popular and important reason for entrepreneurs to obtain a company bank account. It is common knowledge that you can’t accept credit cards with a personal bank account, thus a commercial account is the only option to meet this necessity.
Sure, there are tiny businesses who may not yet see this as a possibility because they still rely significantly on cash, but if your company operates in the digital realm or wants to branch out into digital payments, this is an important factor to consider.
Credit card payments demonstrate your capacity to adapt to the conventions of the day to some extent as the financial world trades using credit cards and you will have to start accepting it as a strategy to develop your firm. Furthermore, a company’s current account simplifies and streamlines the procedure of accepting credit cards, and who doesn’t desire ease in their lives?
To Protect Your Identity
Because you will be making a lot of transactions with your company account, the risk of fraud or identity theft will be increased. You can limit the harm to your dedicated business account if you have one.
There are numerous cases in developing countries like Malaysia where financial theft due to identity theft is common, but a business account can ensure that, at least, your businesses’ interest is secure.
When You Enter A Partnership Or You Want To Incorporate
When you form a partnership, at least one other individual will oversee your company’s financial transactions. You will need a business bank account to do this, as it’s not possible with a personal account.
If you incorporate your company, the scenario is similar. Not only may others require access to the corporate bank account, but there are also legal implications to sharing access to an account.
A corporation must have its bank account because it is considered a different legal entity from its owners. Any business transactions you make through your account will be considered a distinct activity. At the end of the reporting period, or when filing your business and personal tax returns, you will have to account for it.
Conclusion
Clearly, a business bank account isn’t just advantageous for a company, but it is necessary in order to avoid an array of issues in the long run. There are very little risks involved in opening a company account and a lot more perks that come with it.
Did you have other reasons for opening a business bank account?
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