The difference between a business savings account and regular savings account isn’t as big as you might think. Most accounts of any type work to serve two purposes, giving you a place to save your money, and offering an interest return for letting the bank borrow your money while saving.
Because you have access to your funds in either type of account – as opposed to CD accounts – you don’t see huge returns; but their not bad. So how can you decide which type to use if you run a business? Let’s take a moment to look at some potential differences between the business savings account and regular savings account.
Business Savings Account Features
Most would suggest that as a business owner, you take out a business savings account for your earnings unless you are a sole proprietor and operate under your name. The main reason for this suggested separation is being able to decipher between personal and business funds. You can keep better track of your expenditures and profits and simply secure the account as “business only.” In other words, it just makes using business funds easier.
Another reason is that the business savings account, while very often coming with similar features as the regular savings account (debit card, fund transfers, electronic billing options), offer some distinct benefits. Here are a few:
- Business name on documentation. If you open a business savings account you benefit from your business name being printed on receipts, etc. This makes budget reconciliation easy.
- Extras. Depending on the bank you use, you may be able to take advantage of extras like postage-paid envelopes to help you easily send deposits via mail.
Regular Savings Account
If you do decide to take out a regular savings account, you can likely benefit from a lower minimum balance requirement. For instance, your bank may require that you maintain $2,500 for your business savings account. But for your regular savings account, you may not need to maintain any type of minimum balance.
At the end of the day, using a regular savings account can be helpful if you’re not making that much money. But as soon as you’re bringing in more profits, it’s a good idea to shift your funds to a business savings account, again, to take advantage of special features, and to show business legitimacy.