The only essential difference between a personal and business bank account is the name on the account, which is the name of the business, rather than the owner. Yet there are many tax, accounting and related advantages to keeping these accounts seperate and distinct, notes the U.S. Small Business Administration.Continue Reading
While many small-business owners and freelancers may be inclined to keep personal and business bank accounts together, the SBA strongly advises against this practice. There is no tax requirement of this nature, but the IRS does require that personal transactions be tracked separately from business transactions. Parsing these from a single bank account quickly complicates and protracts the accounting process and could lead to tax-submission errors. Separating the accounts minimizes the amount of accounting time needed from the business owner and likely saves money in the long run, even if minor fees are incurred when opening the second account.
Moreover, there is another equally relevant reason to keep these accounts separate: the distinction between personal and business names on the account, notes the SBA. When the accounts are together, all clients and customers must make checks payable to the business owner's name, rather than the name of the business. This may seem insignificant, but to some, this suggests a lack of professionalism and could discourage future business transactions.Learn more about Personal Banking