3 Reasons Why Your Business Needs a Small Business Checking Account

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Your business needs a small business checking account — trust me on this. But if you don’t, read this article to find out why. [[{“value”:”

Owning a small business can be really challenging — especially if you’re still in the “wearing a lot of hats” phase, which some businesses never leave. I understand; as a freelance writer, I’m in the same boat. I wear all kinds of hats and do my own books and accounting. There’s not a lot to it, but it still has to be done.

One of the smartest moves I have ever made in my decades of small business ownership was getting a small business checking account, even though I was a solopreneur. A lot of solos I know don’t bother, they just use their personal accounts for everything and spare themselves the minimal monthly fees.

There’s a lot of value in having a dedicated small business account, or even a set of them, though. Here are my top reasons that everyone with a small business should invest in a single small business checking account, at minimum.

1. Access to small business services

You may not think you’ll ever need small business services through your bank, but what happens if you do and you can’t access them because you’ve never had a small business account? Well, that’s what happened to a lot of people during 2020 and 2021, when the Paycheck Protection Program was in full swing. Companies that never needed a small business loan before were struggling and even going under for lack of income.

But here’s the real kick in the pants: If they didn’t have access to small business services through their bank, they also couldn’t access PPP loan money very easily. I was distressed when I saw how many of my fellow writers weren’t able to get a hand when they needed it because they didn’t qualify as small businesses through their banks. They could apply, of course, but they had to do it through other channels and risk being put on the back burner.

I got my funds almost immediately, in the very first round of distributions, because I had a small business relationship with my bank in the form of small business checking — and I will never not have a small business checking account going forward.

2. Simplifying your bookkeeping

If you’re a solopreneur, you’re probably also doing a lot of your own accounting, or at least your bookkeeping. If you don’t collect sales tax, it’s not super complicated. One way to make this job a lot easier on yourself is to have a small business checking account.

Not only can you use the small business checking to bring all your income through one door, so at the end of the year you only have one account to scour for income that you might not have gotten a form from a client about, but you only have one outgoing fund, too. Some people have two small business checking accounts for this — an accounts payable and an accounts receivable. But if you don’t have a ton of transactions, just one is plenty.

Either way, with small business checking, you can pay your vendors, and yes, even the IRS, out of your small business account, and not have to worry about your personal account accidentally being overdrawn if you make an accounting error while shuffling between both sides of your life.

3. Establishing business legitimacy

Look, we all want to be taken seriously in our business pursuits — and there are certainly ways to look more legitimate. Uniforms for our staff members, fancy business cards, and even a really well put together digital presence are vital, but the appearance of legitimacy a business checking account can provide cannot be overstated.

With a business checking account and business checks, every paper payment (and some electronic ones) says, “I am a regular, normal business, I am not just a person hiding in the bushes pretending to work.” As shallow as it is to say the appearance of legitimacy matters as much to your business as actually being a legitimate business does, it’s true.

These days, it’s hard to know who is for real and who isn’t — scammers are everywhere. But with a dedicated business checking account, people can contact your bank, check that your account is real, and further build up your reputation when they discover that yes, you are the genuine article. Word does get around.

Sometimes, the little things (ac)count

Having a business checking account is a way to simplify your accounting, to give yourself more legitimacy, and, yes, even provide access to business services you may have never considered you might need.

If you don’t have one already, ask your current bank about its offerings, or check out our list of the best business checking accounts for your small business. While some may come with fees, where present, they are often very minimal.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Kristi Waterworth has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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