Business accounts are a super-convenient way to keep your business finances separate from personal ones. However, they also come with some major drawbacks that you should consider before incorporating your business and opening up business bank accounts. Business accounts are an easy way for a business to keep its finances separate from personal ones. They’re also a popular choice among small businesses as well as sole proprietors who don’t have partners or others in their company who need access to their accounts. Businesses often use these types of accounts as well so that their other financial institutions can lend money to them, too. These different types of financial institutions will typically only offer banking services to businesses with their own set of business banking solutions.
What is a Beneficiary?
A beneficiary is a person or entity that receives the assets in a trust when the trust terminates or expires. Trustees and beneficiaries can be individuals or corporations. If a trust is revocable, the grantor can change the beneficiaries at any time. If the trust is irrevocable, the grantor can’t change the beneficiaries at all. When a trust owner dies, a trustee or custodian holds the assets until the trust expires. Generally, a beneficiary must accept the trust agreement to take over the assets and pay their income taxes.
What is a Business Account?
A business account is typically owned by a business and managed by a bank. These accounts come in many different kinds, including savings and checking, business loan, and money market accounts. Savings accounts allow you to keep cash that you can use for daily expenses. The FDIC (Federal Deposit Insurance Corporation) will insure your money up to $250,000 per account owner so that you never have to fear losing your money. Business accounts also differ depending on the type of coverage you choose. Investment accounts typically offer high-interest rates and a wide variety of investment options. Business loans are also managed by banks and may have higher interest rates than savings account rates.
Differences Between a Beneficiary and Business Account
A beneficiary is a person or entity that receives the assets in a trust when the trust terminates or expires. Trustees and beneficiaries can be individuals or corporations. If a trust is revocable, the grantor can change the beneficiaries at any time. If the trust is irrevocable, the grantor can’t change the beneficiaries at all. The most significant difference between a business and a beneficiary account is the legal structure. If you own a business, you need to incorporate your business. Incorporating your business legally separates it from your finances. To incorporate your business, you need to file articles of incorporation with the state.
Pros of a Beneficiary Account
Cost-Effective: These accounts are often free and have no monthly fees. You can open a number of accounts with no fee, provided that the account balances don’t total more than a certain amount. Plus, there’s no limit to how many accounts you can have at no cost.
Flexible: Savings accounts are an easy way to put money aside for unexpected expenses without having to take a specific amount out.
No-Risk: With a typical savings account, the FDIC will back you up to $250,000. That way, if the bank goes out of business, you won’t lose any of your money.
Flexible Investment Options: Most investment accounts are federally insured by the FDIC, so there’s no risk of losing your money.
Easy Access: With a savings account, you can view your balance at any time and cash out at any time.
Low-Visible: With a savings account, there’s no need to advertise your finances or tell potential customers where you keep your money.
Cons of a Beneficiary Account
No Tax Benefits: With a beneficiary account, you don’t receive the tax benefits of owning a business. You can’t deduct any expenses associated with owning a business.
No Bank Account Protection: If your business account gets robbed or accidentally gets closed, you don’t have any protection.
Non-Visible: With a typical savings account, there’s no way for customers to know how much money you have in the bank.
Easy Access: With a savings account, you can’t view your balance or cash out any funds.
Non-Visible: With a savings account, there’s no way for customers to know where they keep their money.
Pros of a Personal Account
No-Risk: With a typical credit card, you have a no-risk option that allows you to spend money you don’t have without incurring a balance on your credit card.
No Cost: With a credit card, you can get the card with no monthly fees or interest. You can pay off your card in full at any time.
Easy Access: With a credit card, you have easy access to your funds by paying them off at any time.
Low-Visible: With a credit card, you can keep your financials low profile.
Easy-to-Repay: With a credit card, you can pay it off in full at any time.
Tax Benefits: With a credit card, you can reap the tax benefits of owning a business.
Cons of a Personal Account
Bad Credit: Credit cards often require a decent credit score, which can be hard for people with poor credit.
Non-Visible: With a credit card, you can see your balance and access funds, but you can’t keep your financials low profile.
Easy-to-Misuse: With a credit card, you can misuse funds without fear of getting caught.
Tax Benefits: With a credit card, you reap the benefits of owning a business, but you don’t reap the benefits of a no-risk, no-cost, low-profile, and easy-to-misuse option.
Why Incorporate Your Business?
Incorporating your business legally separates it from your finances. You can file articles of incorporation with the state and pay annual filing fees. In most cases, you can open a business bank account and take advantage of the benefits of a business account without filing for a business license. If you choose to incorporate your business, you’ll also need to file articles of incorporation with the state. To do so, you’ll need to provide information about your business, including the name and address of the business, nature of the business, etc.
Conclusion
Business accounts are a super-convenient way to keep your business finances separate from personal ones. However, they also come with some major drawbacks that you should consider before incorporating your business and opening up business bank accounts. They’re an easy way for a business to keep its finances separate from personal ones. They’re also a popular choice among small businesses as well as sole proprietors who don’t have partners or others in their company who need access to their accounts.
Business accounts also differ depending on the type of coverage you choose. Investment accounts typically offer high-interest rates and a wide variety of investment options. Business accounts also differ depending on the type of coverage you choose. Savings accounts allow you to keep cash that you can use for daily expenses. The FDIC (Federal Deposit Insurance Corporation) will back you up to $250,000 per account owner so that you never have to fear losing your money. Business accounts also differ depending on the type of coverage you choose. Investment accounts typically offer high-interest rates and a wide variety of investment options.