Starting a Freelancing Career? Open a Business Bank Account
About 1 in 3 Americans have a part-time job on top of their full-time 9-to-5 job. It’s so common there’s a slang term for it: side hustle. Of the Americans who have one, almost 80% of them want their side hustle to become their only job. In essence, these Americans want to become freelancers: people who work for themselves instead of someone else. If working for yourself sounds good to you, you might want to start by opening a business bank account.
Although that might not be the first thing you think about, opening a business bank account is a worthwhile step when starting a new business.No matter how small, every business can benefit from having a business bank account to manage income and expenses all in one place. To help you get your business underway, we’ve created a quick guide to business bank accounts for freelancers.
Benefits of a business bank account
Opening your business savings and checking accounts before you’re ready to accept payments will help you stay organized when tracking business income and expenditures, and give you validity as a business. But that’s not the only benefit to having a business bank account.
Here are a few more advantages you might not have in a personal bank account:
- It’s more professional: A business bank account gives your company credibility in the eye of the consumer, as you’ll be able to write and accept checks for your business, rather than using your personal name. It also prevents co-mingling of business and personal funds.
- It’s flexible: You can grant employees access to your business bank accounts.
- You can build credit: By opening a business bank account, you can start building business credit early to help fund large purchases later. You’ll also have the option to open a line of credit in case of a financial emergency.
- It’s an investment: Your business bank account is an asset to your company and will be important if you decide to sell it later on.
Another benefit of a business bank account is you’ll get access to cash management
services at your bank. Cash management services can streamline your workflow by helping you with collections, payroll, risk mitigation, fraud management and more. When considering your business bank options, review and compare cash management offerings and find a bank that fits your needs.
A quick word about starting a limited liability company (LLC)
Before we go much further into business bank accounts, we should explain what a limited liability company is and why it’s relevant for freelancers. You’ve probably seen the acronym LLC after a company’s name, though you probably haven’t considered making your business a LLC — but maybe you should.
A LLC is a legal business structure that can be formed to run a business. Filing a LLC can provide you with personal asset protection, taxation benefits, management flexibility and credibility. For example, without LLC protection, legal or financial trouble stemming from your work could expose you to personal liability, leaving assets, such as your home, vulnerable.
You may want to talk with an attorney to see if a LLC is right for you and what the requirements are. Although you don’t need a LLC to open a business bank account, it might be a helpful step when starting your freelancing business.
How to open a business bank account
Before you get started, it’s important to know what documents you need to open a business bank account. Once you’ve chosen the business bank account that fits your needs, you’ll need to gather a few important documents. Requirements for opening a business bank account vary depending on the type of company you have.
Here are three common business types and the documents they require:
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- Sole proprietor:
- Your Social Security Number
- Federal taxpayer identification number
- Company taxpayer identification number
- Copy of the company's Articles of Organization (or equivalent document)
- Document showing authorized signers
- General partnership:
- The partnership's taxpayer identification number
- Copy of the partnership agreement (including partner names and business name)
- Business name certificate
At First National Bank and Trust, we offer a variety of business bank options. Explore our business savings
accounts to see what options might work for you. We also offer a variety of cash management services
to help you streamline your business finances and reach your goals.
From bank accounts to cash management, use our business bank services to start, invest in and grow your freelancing business. Contact us
now to learn more and get started.