Can I have 2 Business Bank Accounts?
Although having a business checking account is necessary, opening an extra bank account can be an advantage for your business.4 min read
Can I have 2 business bank accounts? The benefits of having two business bank accounts outweigh the drawbacks. Although having a business checking account is necessary, opening an extra bank account can be an advantage for your business. It is easy to track your expenses with a second account. More so, you can compare different offers from banks and choose one with the best deals.
Three Benefits of Having Two Business Bank Accounts
The Money in Your Business Account May Not Be Yours
Invoices, taxes, and payroll are among the major expenses of a business. When your business is thriving and there's money in your business account, it is common to assume that what you are bringing in is completely yours.
That is not entirely true. You still need to cover expenses before you can claim the money. A second business bank account can help with that. When you receive payments for services rendered, set aside a percentage of the income into your second business account. This can help you maintain cash flow within your business. Though such a habit may not be easy, it will set you high up the ladder among businesses with healthy financial habits.
Two Business Accounts Can Have Different Purposes
In your business, there is money coming in and going out. With all your money in one account, it can be confusing to differentiate what went where. To avoid this, you can open an account for:
- Accepting payments
- Catering to expenses
- Additional savings
It then becomes easy to track expenses, payments, and savings in different accounts.
Safety and Security
Losing your account to a scammer or a hacker is a possibility these days. Anyone with your account details can use your account to pay for stuff. Sometimes, banks may be unable to reverse the stolen cash. Having several business accounts means that you don't depend on one bank. To protect your business bank accounts from hacking, you can set up security procedures so that you can be notified immediately of any suspicious activity.
Is It Possible to Have Checking Accounts At Multiple Banks?
For a majority of individuals, having multiple accounts at one bank makes banking easier. Transferring funds to different accounts in one bank is quick and fast. That's why banks encourage students to open accounts with them while they are still in college. They are aware that most people do not change banks even with varied bank fees. Still, you should monitor your banking yearly or quarterly to ensure that you're not missing out on anything.
Benefits of Having Multiple Accounts
- You can have checking accounts at multiple banks for different reasons.
- You may have a joint account with your partner and open a personal account at a different bank.
- You can open an account specifically catering for bills such as taxes or payroll. Also, you can open an account for just savings or investment.
How to Avoid Overdrafts From Multiple Accounts
Although having multiple accounts can be beneficial, it is crucial that you monitor each account separately to avoid overdraft charges. If your banks provide online banking services, you can easily monitor your accounts on a weekly basis and correct any mistakes. When depositing a check from a different bank, ensure that you have waited for the required time, usually 3-5 business days, before making any withdrawals.
Before you choose your preferred bank, it is important that you understand your business needs. Some banks will offer better repayment plans when you need a business loan. Others will have favorable interest rates. You might find that you like your new bank more than your old one. In such a case, be sure to transfer your funds to the new account before closing the old account. Be sure to check policies offered by banks. Some banks require a minimum balance and charge service fees and penalties for late payments.
Do Not Mix Business Accounts With Personal Accounts
It is best to keep your personal accounts separate from your business account. Instead of taking money from your business whenever you have a personal need, pay yourself each month in a different bank account.
Pros and Cons of Having Multiple Business Accounts
Pros of Having Multiple Accounts
- Keeps your organized.
- Helps you to manage your money.
- Allows you to access your funds despite challenges with one account.
Cons of Having Multiple Accounts
- It can be a challenge to manage multiple accounts. You may need to hire an accountant to help with this.
- Some accounts have restricted minimum deposits.
Having multiple accounts can help streamline your banking processes and payment procedures. That means you can easily monitor cash flow within your business.
If you need help with opening a second business account, you can post your legal need on UpCounsel's marketplace. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.