If you work for yourself or plan to open a business, you may want to consider opening a business checking account. Business checking accounts have several advantages, especially under certain circumstances. In some cases, a business checking account could make things smoother for your business during an audit. Read on to learn more about the advantages of business checking accounts and signs you need to open one.

Business Checking Accounts Streamline Expense Reports

If you only use your business account strictly for business expenses, it makes your expense reports cleaner. A separate business account gives you a good idea of exactly how much you spend on business needs and materials. If you buy and sell a lot of tangible goods, then a business account is a great way to keep track of these sales and expenses.

Even more importantly, a business checking account helps if you are audited. You have a ready record to justify your business deductions. You won't have to go through your receipts or statements to highlight business expenses. The IRS may scrutinize expenses more closely if you mix your personal and business expenses.

Business Checking Accounts Add Credibility

Business accounts not only build credibility with the IRS but also with customers. Paying customers out of an account with a business name adds a professional touch. It makes your business seem more legitimate than when you just use your name. You can also set up a credit card system and alternative payment methods through your business bank account.

Business Checking Accounts Give Personal Protection

In some cases, a separate business account can protect your personal assets, especially if you incorporate. When someone tries to sue your business, your personal finances may be protected. Mixing your personal and business assets can put everything you own at risk. Plus, separate accounts can help keep your business credit score from impacting your personal score.

Business Checking Accounts May Be Required by Law

In some cases, the law requires certain businesses to have a separate bank account. If you incorporate, then the law requires you to have a separate account. However, sole proprietors do not need one. Even if the law doesn't force you to get one, you can still benefit from a business account.

If you own a business, at some time you should consider opening a business checking account. In the beginning, you may be able to get by without separate accounts. However, as your business and expenses grow, this kind of account can help you immensely. Talk to a banker or financial adviser if you want to start up a business checking account.