The nitty gritty of business bank accounts
by Jon Tanner
Key points in this article
- Opening a business bank account
- The benefits of a business account
- Managing your finances early on
The discovery of Xero – accounting software for small businesses – may seem unimportant in the scheme of things.
You’re starting a business! What about all the other things you need to worry about? How well you manage your business finances early on, from the big picture right down to the smaller details, will save you a whole lot of grief further down the track.
Here are some things you should consider when starting a new business.
Open a business bank account the moment you want to explore a new enterprise idea.
Instead of spending money from your personal account during the initial stages of the business, make it official from day one. This will mean you can:
- keep track of your business expenses
- know exactly how much money you’ve invested to date.
You may decide to use your personal account in the beginning because you’re not 100% sure you want to pursue your business idea.
While it seems like a good idea, it also means that there’s a lot of administrative work once you decide to switch over to a business account. It can be really time consuming when you could be focusing all of your efforts on growing your business.
Opening a business bank account earlier rather than later can save a lot of hassle
Understanding the benefits you’ll get from a business account
The main reason to open a business account can be for compliance reasons. You don’t want to muddy the water from a tax point of view between your business and personal finances, so it’s best to have that clear line of separation between the two.
Here are the things that can make your life easier by using a business account:
- There’s an overdraft facility to cover any surprise costs.
- Your bookkeepers are able to load back payments to suppliers, which saves a whole lot of time.
- You could make international transfers directly from within Internet banking.
- Bankers who specialise in small business ownership are more accessible – they could help answer the sticky questions you have.
- You can link your business account to Xero.
The benefits can far outweigh the negatives of having a business account
Manage your finances carefully
Starting a new business is never easy, but it’s important to remember that careful management of your finances early on will save you time (and money) further down the track.
The sooner you set up a business account, the sooner you can get access to all types of services and accurately map just how much you’re investing early on.
It’s crucial you manage your finances well in the early stages of your business
ANZ have asked me to blog for them. The opinions expressed here are my own and not those of ANZ. I have received no financial benefit from Xero or any other party for the views expressed here.