How to Structure Your Business Bank Account: A Simple Guide

Organizing your business bank accounts effectively is essential for maintaining clear financial records and managing your cash flow. While it might not sound exciting, structuring your accounts properly can significantly impact your business’s financial health. Start by reading our guide.

Understand the types of business accounts available:

• Business Checking Accounts: Ideal for daily transactions such as paying bills, making deposits, and withdrawing cash. This account helps you keep track of your day-to-day expenses and income.
• Business Savings Accounts: Useful for setting aside funds for future needs or emergencies. This account earns interest on your balance and can be a good place to keep surplus cash.

Find out what you need to open a business checking account with Frontier Bank.

Keep Business and Personal Finances in Their Own Spaces

One of the most important steps in structuring your business bank accounts is separating your personal and business finances. This separation not only simplifies bookkeeping but also protects your personal assets from business liabilities.

• Open a Business Checking Account: Ensure that all your business transactions go through this account. Avoid using your personal account for business expenses or income.
• Get a Business Credit Card: Use it for business expenses and to build your business’s credit profile. Bonus points if you snag rewards or cash back!

Apply for your business and commercial loan today.

Organize Your Cash Flow

Effective cash flow management is essential for maintaining your business's financial health. Here’s how to organize it:

• Create a Budget: Develop a detailed budget that outlines expected income and expenses. Regularly compare your actual cash flow to this budget to identify any discrepancies.
• Set Up Cash Reserves: Build a cash reserve for unexpected expenses or seasonal fluctuations. Aim to set aside a percentage of your income regularly in a savings account.
• Monitor Transactions: Review your bank statements and account transactions often. Use free online banking and mobile banking to catch errors, prevent fraud, and stay on top of your financial status.

Monitor your account with our online and mobile banking solutions.

Set Up Financial Controls

Implementing strong financial controls helps protect your business from errors and fraud.

• Use Accounting Software: Let technology handle the boring stuff! Integrate your business bank account with accounting software to keep track of everything effortlessly.
• Limit Access: Restrict account access and online access to authorized personnel only. Ensure that you handle any account information securely.
• Regular Reconciliation: Reconcile your bank statements and transactions with your accounting records monthly. This practice helps detect discrepancies and maintain accurate financial records. With online banking resources, you can do this when it’s convenient for you.

Use our cash management system to customize multi-user account access.

Plan for Taxes

Proper tax planning is crucial to avoid surprises and ensure compliance.

• Set Aside Tax Funds: Regularly transfer a portion of your income to a separate savings account dedicated to taxes. This will help you cover tax liabilities without disrupting your cash flow.
• Keep Detailed Records: Save all your receipts and invoices. This documentation will be invaluable during tax season and in case of an audit.
• Consult a Tax Professional: Work with a tax advisor or accountant. They’ll help you navigate the complexities and make sure you’re getting all the benefits you deserve.

Open a savings account dedicated to setting aside tax funds.

Consider Future Growth

As your business expands, your banking needs might change. Stay adaptable:

• Evaluate Your Banking Needs: Regularly review your accounts and services to ensure they still align with your business needs. For example, you might need additional accounts or more sophisticated financial products and online services. Consider things like remote deposit capture or cash management services as your business grows.
• Explore Business Loans and Lines of Credit: Dream Big! If you need extra cash to expand, look into business loans or lines of credit. Meet with a Frontier Bank Commercial Banker to learn more opportunities to take your business to the next level.

Choose the right accounts. Keep your finances separate. Manage your cash flow. Set up controls. Plan for taxes. Prepare for growth. These steps will help ensure your business's financial success.

So, get started, have fun with it, and enjoy the peace of mind that comes from knowing you keep your finances in great shape! Get in contact with Frontier Bank for your business and commercial needs.

Tracey Hoefert

Vice President of Retail Banking

traceyh@frontierbk.com

Phone: 712-441-4348