Most small business owners (especially new owners) don't put much consideration into keeping an accurate set of books. Unless you love to crunch numbers, the tedious task of accurate, daily accounting entries is an unpleasant thought at best. But without some form of accounting, practically all businesses will eventually fail. The financial status of a business can be clearly understood when an accurate set of books are kept. By having an accurate financial "picture", an owner can adjust the company's direction and prevent a small problem from becoming a large one. The small business and the large corporation both rely on the accuracy of their accounting to maintain financial health. Every new business can benefit from having one of these: the business bank account.



The #1 thing any new business owner should do is setup a business checking account. Visit your local bank and tell them you need to open a small business account. You will most likely have to file for a DBA ("doing business as") before your bank will give you an account. If a DBA is required, your bank can give you the information needed to file for one. If the thought of additional monthly fees for a second account bother you, don't worry because more than likely the bank will have a "fee free" account option for your new business. If you discover your bank does not offer free checking accounts, shop around and you'll eventually find one that does. Visit all the nearby banks and find out if they offer free checking. Inevitably, you'll discover one that offers no-fee checking accounts. Also, make sure you request a debit or credit card that is directly attached to your new business bank account.

You must keep several guidelines in mind when you manage your business account. The first is: do not pay business bills with cash! Why? It's too easy to forget about cash payments; they may never make it into your expense ledger. All expenses and bills should go through your checking account. You need to always write a business check or use your credit card for bills. A permanent record of every bill or payment is necessary, and checks and credit cards do this automatically.

Another guideline: deposit all income into your bank account. This includes any check that was made out to you and any cash you might have received. If you can remember to follow this guideline, you will be guaranteed a permanent record of your income. When your bank account contains an accurate record of expenses and income, it will be much easier to balance.

The last guideline to remember is to never pay personal bills through a business account. It is never advisable to manage funds from the same bank account. Mixing funds with your business account will create more work for your accountant. When a company has multiple owners, it can cause unnecessary tax and legal complications. If you really want to avoid tax complications, don't ever mix your expenses!

Your business accounting will be much easier to manage if you follow the above listed guidelines. Veteran business owners and new business owners would both benefit by following the above listed banking suggestions.