When you start a business, one of your initial work is to open bank account in Singapore. It is essential to keep your deposits and business spending separate from your banking and it’s not enough to simply keep separate records.
Entrepreneurs may opt for distinct banks for their business and personal accounts or select one bank that provides competitive accounts for both. Below is a list of several reasons to keep your business funds separate from your cash.
Clean & Accurate Bookkeeping
Simply, everyone wants to start their small business at the lowest cost. The majority of people have a myth that they can save money by not setting up a business banking account Singapore,whereas considering the significant time and energy will cost much more at the time of tax.
If you have a separate business bank account Singapore for your business transactions, you have a proper detailed record to provide your accountant at the end of the year. It is vital to have all your invoices and receipts to match your checkbook and bank statement entries and you’ll be in better shape when tax time rolls around.
Prove Your Business Is Not a Hobby
In today’s time, many people are running their business from home, and this is why it has become crucial to manage the business and personal expenses separately. Usually, people can take a deduction for your home business space, but they need to know brief detailing of office expenses versus home expenses to make your depreciation calculations.
The Internal Revenue Service (IRS) is picky about proving your business is in fact a business and not a hobby. If you have losses that you deduct from your income for three continuous years, the IRS may decide you’re conducting a sideline business. Further, you are inviting an audit for your business, if you have a separate business bank account and a well-maintained set of business books.
Separate Account Required for Incorporated Businesses
If your business is incorporated, the IRS needs that you have a separate business bank account. No matter what, if your company is a corporation or a partnership, or an incorporated sole proprietorship. If you’re integrated, you must have a separate bank account. When an organization incorporates, it becomes its legal structure and is set apart from the individual who establishes the business.
Also, if people want to apply for a business loan, no matter what legal business type you have or where you get the loan from, you will need a business bank account.
Definitely, many people need a merchant to accept bank card transactions on the sales, which means that firstly they will have to get a business bank account and if in case you have a retail business, you’ll also require a business bank account for your point of sale system.
Everyone wants their business to maintain a professional edge. If an individual manage the business finances separate from their personal finances, your company’s underlying dedication should be towards professionalism. This defines that when you write checks to vendors, they see that the checks are coming from a business and the IRS sees this, as well.
A Clear Audit Trail
Personally, an individual never is audited by the IRS, but unfortunately for your business, it’s always a possibility. When an audit does take place, it is essential to have clean record-keeping through separate bank accounts.
You need to ensure and manage all your invoices and expense receipts as a backup material. If you merge your personal and business finances in one bank account, an audit by the IRS could turn into a nightmare.