A dedicated business bank account is a must-have for any small business owner. Keeping your business and personal finances separate is essential but separating your business finances into multiple accounts may benefit your business too. There are no laws against having more than one business bank account and the pros out weigh the cons. However, every small business is unique, and it’s up to you to determine what type of accounts may suit your business best. We’re highlighting some key considerations when operating out of multiple business bank accounts.
The benefits of multiple business bank accounts
Separating expenses into different bank accounts helps with financial tracking. For example, let’s say you want to track payroll or incoming invoices—having a separate account for each gives you a more accurate representation of money allocated to a specific need. Having multiple accounts can also help you save for different goals. You can have a separate account to save for a significant renovation or an expensive piece of equipment.
Potential challenges of multiple business bank accounts
Having more than one business bank account can be tricky and time-consuming, especially if you already struggle with money management. You will need to know and pay attention to minimum balances and avoid unnecessary fees. Many accounts have limits on how often and how much money you can withdraw from your account. Multiple accounts could also make bookkeeping difficult, potentially complicating cash flow. It adds additional financial responsibility onto your plate — something to consider before you open another account.
Opening multiple business bank accounts
To open multiple business bank accounts, start by registering for an employer identification number (EIN) from the IRS. Filing for an EIN is free to file for and will be required when applying for an account. Please note, your bank may require more documentation along with your businesses EIN. Next, you’ll need to apply for a business checking account, which will help you manage payroll and get paid by clients. Finally, you will need to decide what additional account your business may need, whether that is an additional checking account or a savings account. A Live Oak Bank business savings account, for example, allows you to earn one of the most competitive rates in the country.
It can be advantageous to open multiple business bank accounts, especially if you have specific savings goals or want to streamline your taxes. Be aware that having multiple accounts has its drawbacks and it’s important to stay organized with your business finances.
Partner with Live Oak Bank today and open an FDIC-insured business bank account here. It takes just a few minutes. Or, to speak directly with a Customer Success Manager about your business savings account, call 866.518.0286.