Citizens Bank has released a study that shows 26 percent of small business owners lack a separate account for their company. That’s in spite of the potential risks to their personal tax status and their future access to credit for their business.
Commingled personal and business funds can have harmful implications for both personal and company finances, said Quincy Miller, president of business banking at Citizens Bank. “Using a personal account for business finances is an easy mistake to make when starting out but it can quickly become a liability. For instance, paying personal expenses using business money or vice versa makes it far more difficult to get your accounting right at tax time,” Miller said.
He added, “You also want to have a separate account for business so you can build a financial history that you can later use to apply for credit and other products or services you may need to run your business.” There’s a further risk, Miller said, that personal obligations may not be met in favor of business expenses.
In addition, 98 percent of those surveyed who currently run their business with their personal account ranked the absence of monthly maintenance fees as being of the highest importance to them, while over 90 percent of businesses with a business checking account ranked the absence of maintenance fees as important.
