If you’re starting your personal training business or you’re exploring the idea of starting one, there’s a lot to consider, especially when it comes to the financial aspect of your business. If you want to be successful, you must commit to handling and managing your money well. Without proper organization and management of your finances, you risk putting all your hard work in serious jeopardy. We’re focusing on one aspect of owning a small business in this article: whether you need a business bank account to get this dream of yours up and running–– and most importantly, successful. Let’s jump into it!
Once you have named your business and sorted through the legal aspects of your business such as establishing it as a LLCor corporation and registering for taxes, it’s time to set up a business bank account which could include a business checking account, business saving account, or business certificate of deposit.
You might ask, “Why can’t I just use my personal account, if it’s already set up and ready to go?” Setting up a business bank account offers major protections for your personal assets. If your personal and business accounts are combined, you’re putting your personal assets such as your house and car at major risk if your business faces legal trouble. Setting up a separate business bank account also offers you the opportunity to build business credit and other financing in your business’ name, rather than your own. Plus, you can earn better interest rates, higher lines of credit and more.
Another benefit of having a business bank account for your small business centers around privacy. If you go into business with a partner, they’ll need access to the business’ financial information and records. Simply put, you most likely don’t want your friend or colleague to have access to your personal financial records. Later down the road, if you hire employees, you won’t want your personal finances widely accessible. Once again, a separate business account ensures that your professional and personal lives don’t mix and cause issues.
If you need to acquire financing down the road, having a separate business bank account adds credibility to your business. When lenders are reviewing a business, they want to see proof that your small business has its own accounts, a stable source of income, and a good credit score. Having a designated business bank account makes your business look all the more professional to both your clients and financial institutions.
You also might want to consider investing in accounting or bookkeeping software such as Quickbooks, Xero, or Freshbooks to help you stay organized. Using a designated software can help you organize any payments, checks, receipts and bills. Starting out, it might seem easy to keep track of these on your own, but don’t solely rely on yourself to stay organized. As your business continues to grow, the financial aspect will only become more complex. Having a safeguard in place, such as a bookkeeping software, can save you a lot of time and stress associated with managing your business’ finances.
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Keep in mind, every bank has different requirements around what you need to set up a business bank account. While requirements vary, you can generally expect to need a tax ID number (you’ll get this from IRS), a social security number (if you’re setting up your business as a sole proprietor or partnership), proof of incorporation (this is necessary for corporations such as LLCs), and a business license or your business’ name filing paperwork.
Starting a personal training business is simultaneously exciting and a lot of responsibility. While the financial aspects of your business such as setting up a business bank account might not be the most glamorous part of this new adventure, it’s key to ensuring that your business is successful. Understanding the key benefits, financial tools to help you stay organized, and what you need to set up a business bank account will help streamline the process and take you one step closer to getting your personal training business up and running!