When starting a new business venture, the most important step that you are advised to perform to get financially sorted is to open a business account for your company. However, when looking for a perfect business bank account, there are a few mistakes that you should avoid at all costs.
Below are a few things you must avoid when opening a business bank account for your company.
- Incomplete Information of the Account – Whenever you are about to attend an account opening appointment, ensure you have all the documentation needed. And if you are unsure about the documents required, ensure that you bring all the necessary ones. Before you attend the meeting and set your appointment, research the bank about what documents are important and needed. If you are missing any crucial documents, you might need to reschedule your appointment, which will cause a delay in your venture establishment.
- Use SSN or TIN– In case you are not aware of what these initials describe, SSN stands for social security number, and the next one stands for Taxpayer Identification Number. When you schedule the appointment, ensure that the number placed on your account is either TIN or SSN number. Any process or application that requires an identification number of your business organization must feature the TIN or SSN assigned to you while filling out the paperwork for your company’s registration as an LLC.
- Separate accounts – Some people think there is no problem using a single account for their personal and business needs altogether. But it is highly recommended to use separate accounts for your personal and business needs so that you don’t have to tackle experience issues when it comes to accounting & taxes. Another crucial point to keep separate accounts is to refrain from being attracted towards the amount that is strictly designated to the company. Hence, it can be challenging to perform all your financial transactions, whether for personal use or for business, from a single account.
- Monitor signing axis – If you have established your business on a partnership, ensure both partners have access to sign checks. If your partner does not have the check signing access, you might be the only one who is able to deposit checks, or any check might be flagged when your partner attempts to sign it. Hence, to avoid wasting time, make sure that you take care of these minor details beforehand. As you never know when you might need a check deposited, and you are not available to do it yourself.
- Selecting the wrong bank – Not every bank operates with equal diligence, and neither do they offer all the features and services you might be looking for when opening a business bank account with them. The bank you chose might have strict limitations on their allowance to a new business owner when talking about business credit. Another thing you must watch out for is that a new and not well-known bank must not be approached. The reason Is the protection of your company and your money. When talking about a business banking account, make sure that you meet the bank’s requirements and protect your funds from any sort of banking scam.
- Monthly minimum balance and fees – another basic mistake made by small businesses is not enquiring about the minimum monthly balance. It means that your account must hold a specific amount towards the end of each month, or
- you might face a monetary penalty. You must also enquire about the monthly maintenance fees deducted from the account. Moreover, it is beneficial to take notes. Suppose there is anything you have to perform from your side without additional fees that might come up along with making large transfers to different business accounts or to your business savings account. Talking about your business savings account, a typical bank might only allow you to make a certain number of withdrawals from this account each month. You might have to pay a monetary fine when exceeding the number of acceptable withdrawals.
- Ordering the wrong check – make sure when you order checks for your business the correct name is printed on each check. Some people make the mistake of using their personal names or other names on the cheque instead of printing out their organization’s name. This becomes problematic because when a payment processor puts forward a payment, they ensure to avoid any fraud, and check that the name on the check is legit. If another company’s or your name appears, it might lead them to flag the payment as fraudulent. This might even leave you on the phone calls, giving a clear explanation and having to order new checks. Avoid this mistake and ensure that only your business organization’s name is printed on the check.
Now that you have encountered all the major mistakes that must be avoided while opening a business bank account, you are ready to open one for yours. Avoid all the mistakes listed above, as it might help you save valuable time and the frustrations of meeting inconveniences and prolonged delays of regular financial transactions.