How Many Bank Accounts Should Your Business Have?

Proper planning is essential to start a business, and every successful business has definite needs. One main thing that needs to be taken care of from day one is the company's financials.

Multiple bank accounts are essential for proper money management. Business owners should do adequate planning of numerous bank accounts before starting a business. Several bank accounts are needed to manage the finances well and also to prevent a financial crisis. A business account should be separate from a personal savings bank account.

Different types of bank accounts a business needs

For a growing business, it will need different types of bank accounts. These multiple bank accounts will help to control different aspects of the business. There are five bank accounts that most businesses need.

The main current operative account

The main current operative account is the most important bank account for a business. Business clients use the main current operative account to conduct all important transactions. This is the main account where all money earned from the business gets deposited. Business owners could later transfer the amount deposited in this main current account to other business-related accounts.

The tax account

Taxes are vital for the development of a state. Paying taxes is the role of every citizen. Every business owner is responsible for paying taxes on their business. Different parameters determine how much tax is to be paid to the state.

A different account for all kinds of tax payments is an important requirement for any business. It is considered a good idea to keep 30% of a business' monthly earnings separate for tax payment. Business owners will later use this amount to pay taxes.

The dream savings account

Separate savings accounts for the development of business goals are also important. Every business needs some amount of money for the fulfillment of future goals. Goals could include expanding the business on a large scale or the development of an app for marketing the business.

The foreign currency account

Many developing businesses have international clients or foreign clients. A foreign currency account is essential for conducting business transactions with foreign clients. A foreign currency account helps in the smooth transfer of money with foreign clients. This account facilitates easy conversion of currency and online transactions taking place over a large distance.

The emergency funds account

The main purpose of savings is to be able to handle any unexpected financial emergency. Emergency funds are an essential part of any business. During a financial crisis or an unexpected loss in business, these emergency funds help in handling it. The emergency fund should contain at least three months' worth of expenditures.

Conclusion

Multiple bank accounts are helpful for the proper management of business finances. Different bank accounts for different purposes of business help keep track of expenditure and revenue of the business. Multiple bank accounts also help in proper financial planning for the business. Adequate planning before starting a business is an essential step. A wise choice of bank account helps in more savings and growth of the business.