Yes, it is.

Starting a business is difficult; there is no sugar-coating it. Anyone that has ever started a business has endured the endless list of daunting tasks that need to be completed before the business was fully up and running. It can be very tempting to rush through as many of the tasks as possible. It’s even easier to tell yourself that you can revisit some of those tqsks later. However, in reality is that most individuals don’t. Instead, they get complacent and tell themselves, “It has worked this way so far.” The truth is that this is a recipe for failure. There are many steps that are critical to successful business operations, and a business checking account is one of them.

Why?

In this article, we’ll explore the top reasons why a business checking checking account is a non-negotiable item your business must have.

Simplifies Taxes

Tax law can be complicated. Why make something that is already complicated even more complex? There are certain deductions that your business may qualify for. However, if you combine your business’ expenses with a personal purchases, differencing the two can be a daunting task. Keep it simple. Use a business checking account for all business purchase. Your accountant will appreciate it.

Protects Your Liability

When you form a business, you are creating a new business entity. Unless you are a sole-proprietor operating as yourself, your new entity will be separate from you personally. This is important to many business owners because they want their personal assets to be separate from their business assets. There is, however, a phrase refers to as “piercing the corporate veil,” that refers to a situation in which a court puts aside a business’ corporate liability and decides to hold the business’ principals personally liable for the business’ actions or depts.

A business checking account helps prevent piercing the corporate veil. Some businesses commingle business funds and personal funds to the extent that the courts have deemed that the the business was operating as an alter-ego to an individual. Consequently, the corporate veil can be pierced, allowing the individual’s assets be treated as the business’ assets. Now, there are a variety of reasons for why corporate veils could be pierced and there is a certain threshold that needs to be met in order to justify the action of voiding a principal’s limited liability, but creating a business checking account for business transactions is a first-step that all businesses should take.

Builds a Banking Relationship

Business is all about relationships and network. By opening a business checking account, you are starting a relationship with a financial institution that may offer you credit later. While the action of opening business checking account won’t necessarily give you business credit, it can be the foundation for a relationship with a bank that may later be the first institution to give you a business line of credit.

Ready to Open a Business Checking Account?

Get started today. There are many financial institutions that are looking for entrepreneurs like yourself to open business checking accounts with them.

Unsure of where to start? Take a look at Novo. Novo offers an online business checking account that is very friendly to small business owners. With perks like free checking, no account minimums, and more, Novo is great for businesses that are looking to start a banking relationship for the first time.

Check out our review of Novo here.