Whether you need to accept deposits, pay bills, or manage your purchases more easily, having a checking account is a must. Checking accounts can be opened almost anywhere, including at a traditional bank, local credit union, and even online.
However, not all checking accounts are alike.
Personal checking accounts are for managing your personal finances. If you’re self-employed or a business owner, you’ll also want to have a business checking account to separate your finances.
Keep reading to learn about the difference between a business and personal checking account.
A business checking account is used to manage business finances. This type of account is most used by business owners, entrepreneurs, as well as those who are self-employed. If you don’t fit into either of these categories, then chances are that you don’t need a business account.
Business checking accounts are used for all sorts of purposes, including:
Banks offer business checking accounts for all business structures, including sole proprietors, partnerships, LLCs, and corporations.
Personal checking accounts are designed for managing your personal finances. These accounts are used for a variety of reasons, including:
Anyone over the age of 18 can open a personal checking account. Parents can serve as guardians and legal co-owners of personal checking accounts for minors.
The biggest difference between business and personal checking accounts is how they are used. However, there are other notable differences to be aware of.
Business accounts and personal checking accounts both offer common features such as debit cards and check writing. However, there are certain features offered by business checking accounts that aren’t offered by a personal account.
Banks that offer business checking accounts may offer all sorts of helpful features for business owners. This includes things such as making payments to vendors, payroll processing services, employee debit cards, bookkeeping integrations, and merchant services for processing card payments.
These features enable business owners to effectively manage their business’ finances.
Business and personal checking accounts also have different account requirements. This includes things like:
For instance, to open a business account, you must show the bank proof of ownership. This means you’ll need to provide a copy of your business license, articles of incorporation, or whatever documentation is needed by your specific bank.
Business checking accounts may require anywhere from $500 to $10,000 to open, while a personal checking account can be opened with $1.
Business checking accounts also have higher minimum balance requirements to avoid monthly fees. It charges more and higher fees when compared to personal accounts.
While business and personal checking accounts have some things in common, they are meant for very different purposes. Simplify your financial life by knowing what kind of checking account you need. Now that you know the differences between these two accounts, you can choose the one that best meets your financial needs.