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There are a lot of things you’ll want to invest in to make the day-to-day running of your business easier. For example, keeping on top of cash flow can be one of the most challenging aspects of being a budding entrepreneur. However, there are tools out there which can help, such as a dedicated business bank account.
Here, you’ll discover what a dedicated business account is, how it works, and the benefits one can provide for you and your company.
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What Is a Business Bank Account?
A business account is much like a personal account. It allows you to deposit money into it, make payments using a debit card, set up bill payments, and transfer money to other accounts.
The difference is that it is opened under your business name. Moreover, you actually need a business bank account if you’re running an incorporated or limited company.
On the other hand, sole traders and business partners may be able to still use a personal account instead of a business one. However, you would have to check this as some banks don’t allow you to use personal accounts for business purposes.
How Does a Business Account Work?
Business bank accounts work a lot like personal ones. However, there may be certain eligibility factors you’ll need to meet in order to open a business bank account.
Additionally, there are different types of business bank accounts available. Therefore, it’s important to make sure you’re choosing one that works for your business.
For example, you may need to have a minimum annual turnover to benefit from one of these dedicated accounts. Some also require you to have a set number of employees.
You can also get a prepaid business account which allows you to set spending limits for your employees. This ensures they don’t go over budget. Meanwhile, they can withdraw money from the account as and when they need it for business purposes.
For these reasons, it’s important to look at the terms and conditions of the different accounts available.
There are a lot of benefits of having a dedicated business bank account. They allow you to easily work out your annual tax more easily, and they are much easier to track. You’ll be able to monitor your business expenses and provide more accurate tax records.
As you can see, business bank accounts can prove useful for entrepreneurs. However, before signing up for one, it’s important to look into the different types available and ensure you meet the eligibility criteria. Many business accounts require a monthly or annual fee to use them, too. This is another factor to consider on your search.