If you run your own business, you have hundreds of things to manage. Whether you’re a gig worker, a maker of things, or a seller of goods, one thing is certain: it’s important to simplify where you can.
Over the last several years, many Canadians have transitioned to working from home. If you run part or all of your business from a home office, you may struggle to separate your personal and business lives. As a result, your long to-do list may blur the lines between home and work.
This can happen to your banking, as well. Let’s take a closer look at why it is important to create boundaries between your personal and business banking accounts.
1. Keep better track of payments and cash flow
If your small business has only a few transactions each month, it might be tempting to let them run through your personal banking account. But as your business grows, so does the risk of confusion.
For example, you may have automatic payments for your mortgage, car loan, or subscriptions withdrawn from your personal account each month. You could easily end up paying personal expenses from your business funds or vice versa.
As cash flow is vital to any business, it's important to track and understand how money is flowing into and out of your accounts. A separate business banking account allows you to see and analyze your income and expenses easily. It also helps to simplify your records at tax time, avoiding unnecessary complications.
2. Convey stability and professionalism
When you separate your business banking from personal accounts, you send a message to the people and organizations around you: “We’re reliable and we’re here to stay”.
This boost in professionalism is good for your brand and your relationships. With this simple change, customers, suppliers, and potential business partners will consider your business more established and reputable.
On the flip side, if you continue to run a growing business through your personal banking, you run the risk of appearing less stable.
If you want to measure the financial strength of your business and how it stacks up to other companies in your industry, take our Financial Resilience for Business Survey.
3. Build credibility for future business growth
Finally, it’s important to separate your business banking for long-term credibility. Down the road, you may need access to a business loan to support your growth.
A lender will want to see your finances, in order to determine whether or not you are a good candidate for a loan. Without a separate business account, it will be challenging to evaluate your cash flow and the overall health of your business.
At Meridian, our business banking team specializes in helping Ontario business owners at every stage of operation. From your first gig to expansion and succession, we can help you plan for the long term.
Interested in learning more? Let us recommend the right combination of accounts for you or explore your options online.
Questions about business accounts or financing options? Speak with one of our business advisors.