Factors that you should tailor in while opening a business savings account

There are a number of banks that offer business savings accounts with varying features and regulations and it can get pretty murky when you decide to start looking for a good account. It is imperative that you have a business savings account when you start a new venture. It will allow you to manage your finances effectively while also giving you complete control over the funds.

You will obviously be confused by the varying interest rates that are offered by the banks. Interest is a very important aspect for many obvious reasons, but there are many other things to consider while opening an account. You need to study the charges that will be applicable on your account throughout the tenure of operation. If you end up choosing an account with a high interest rate, you will most obviously have to settle for greater penalties on things like overdraft. When you start out a business, it is always better to go for lower interest rates with lower penalties and no annual fees. Only later when you gain momentum should you consider higher interest rates.

You will also have to ask yourself whether you really need a business savings account or whether you can just park all your funds in a personal account. Limited companies are legally bound to have business savings accounts. This is due to reasons like tax calculations and also stake holder interests if you go public. If you have a dedicated account for your business, it allows the tax man to do audits with ease without you having to give any inputs. This will also prevent misunderstandings amongst board members when you have a single account with all the transactions made by the company showing on it.

It should however be remembered that many services offered by the banks are not necessary for the normal functioning of a business. When you start a business, the major services that are required are the regular withdrawals and payments. In the beginning, if you are going to have to pay for a business account is usually will not make much sense. But later on, when decent and consistent profits are made, a business account is highly recommended. Besides, in times where you business goes bankrupt you will need to show an account to the government in order to file for bankruptcy and avoid criminal charges against you. As a business man, you are accountable to a number of people. These people include your employees, and your share holders. You need to show them that you are using the funds that they helped create in the best interest of your company.