If you've just started your own small business, one of your first steps should be to open a separate checking account for your business. There are five main reasons why business owners should have a business checkbook separate from their personal checkbook:
Legal Protection: A separate checkbook contributes to what lawyers call a "corporate veil." This means that you recognize your organization as is its own entity separate of your personal checkbook. Maintaining the corporate veil of your business will protect your personal assets from your business liabilities.
Decision Making: A business checking account provides improved decision making. Having a checkbook for your business allows for better bookkeeping, tracking of expenses, and budgeting. These all lead to educated decision making.
Reduce Stress: Having a separate checking account will reduce your stress levels and anxiety because you do not have to worry about disorganized banking records or the financial health of your business.
Audit Protection: Having a separate checkbook can provide audit protection. When your business and personal checkbook are one in the same, the IRS will often disqualify numerous expenses due to the intermingling of personal and business expenses.
Tax Preparation: A separate business checkbook will likely improve your personal income tax return. Through better bookkeeping and avoiding missed payments, you will be better suited to track deductible expenses and lessen your overall tax bill.