Business checking account simply put is a business bank account which is used to handle all cash in flow and out flows of your business. Business checking account give ecommerce business owners a way to collect all its revenue generated at a single place. If you have registered your company as a LLC or a corporation it is mandatory to have a business checking account. If you have positioned yourself as a sole proprietor then having is business checking account is optional. Although it is not mandatory to have a separate business account if you are looking to have a long term business and expecting some serious revenue then business checking account is the way to go. There are many reasons for this.
- No cash deposit costs – Most business checking accounts charge you for cash deposits in to the account. Typically of the range of 0.2 to 0.5%. Unlike retail outlets where revenue is generated in both cash and card transactions for an ecommerce business all transactions happen online. This makes having and maintaining a business account a cheaper affair for an ecommerce business.
- Easier Tax and Accounting Audits – Having a separate bank account for business keeps personal expenditure separate. This will make it easier for you to access business expenses, calculate taxes, manage payroll and other business accounting.
- Liabilities – When you use your personal account your personal assets are liable in case your business goes under debt. This poses a huge risk for your personal life. Having a separate bank account keeps you safe from such major losses.
- More autonomy in your team – When you use a personal account for all business transactions no member in your team can use credit cards and bank sign in to carry out day to day business activities like payments and accounting. Having a business account will give all authorized personnel in your team the liberty to handle online transactions without you having a fear of theft of personal assets.
- Credit Card – You can avail a credit card on your business account. This will make your life easier by using it for day to day business activities.
Before you setup a business checking account.
Before you set up a business account you must register your business as DBA – Doing Business As. You will need to obtain tax ID number by submitting a form to through the IRS Website.
After you setup a business checking account
Since an ecommerce business needs you to transact and process online payments you will need a merchant account and payment gateway to process customer payments.