As a business owner, it is imperative to separate business and personal activities. Co-mingling transactions and activity can leave an owner open to scrutiny by the IRS in an audit. While the occasional use of the incorrect card can slip by, the cleaner and more separated the books are, the less the IRS will find an issue with them. Additionally, if it is clear that all transactions being counted as business expenses, and therefore tax deductions, are truly related to the business, the IRS is less likely to disallow deductions.
One of the main benefits of using a business bank account is that the account, and any business credit card, can be opened using the business’ Employer Identification Number (EIN) instead of the owner’s Social Security Number (SSN). This element really helps to cement the separation between personal and business activities. Additionally, this EIN setup gives a bit more liability protection to the owner’s assets and other accounts. If the business checking and CC are personal accounts being treated as business accounts, the owner has left a wide-open path for an auditor to go into the rest of their personal activities.
FAQ about Business Banking
- What if I don’t have a business credit card or cannot get one because the company is so new?
It’s not strictly necessary for the business to have its own card in the company name; you can use a personal credit card as long as it is dedicated to business expenses 100%. You can also reimburse yourself for personal funds used for business from your company later. However, we do recommend for the complete separation of business and personal activity that a new credit card with the business name be acquired. - All banks require a physical location address now as part of setting up a business bank account, hence being forced to use a residential address. Do you provide a service that can address this issue as they will flag it?
Yes, we will allow our corporate address to be used as your S-Corp address if you desire; this will make all federal and state notices be mailed to our address first to be forwarded on but we do offer that service. - Will you have full access to my bank account?
We have view access only, meaning we can track, reconcile and manage your financials, but we can not pull or transfer money out of it.