For independent creatives, a business bank account is essential.
Having a separate account for all work-related money — payments from clients, money for taxes, income for yourself and your team — sets your business up for long-term success and should be set up as soon as you get started.
Not only does it help you keep track of your expenses and better manage your finances, but a business bank account can also help you increase your profit margins and avoid scope creep.
Here are five ways creating a business bank account helps you make more money as a freelancer or studio owner.
Better manage your spending
When you’re running a solo business, it may be tempting to just use a personal checking account. After all, if the money is going directly to you, and only you, why does it have to be in a separate account?
Well, as you grow your business, you’ll start to have more expenses aside from your personal salary. And as you rack up expenses, you’ll want to make sure you’re managing and tracking everything that’s going out of your bank account. Separating your business and personal accounts makes it easier to do this.
When you have a business bank account, you’re only going to reach for your business card when it’s for a work-related expense. In other words, only for essential transactions. Having this separation will help you better manage your expenses and limit your spending to just work-related expenses.
Take charge of your taxes
A not-so-fun but very essential part of running your business as an independent is paying your estimated quarterly taxes.
Having a business bank account serves two purposes when it comes to taxes. For one, you can use it to set aside money for your taxes each month. Once it’s in your business bank account rather than your personal account, you know that it’s not yours to spend.
Second, with all of your business expenses in one place, it’s easier to track all of your eligible tax deductions. Greater insight into your expenses and potential deductions can help you take control over your taxes and keep more money in your pocket.
Get paid faster
Some personal checking accounts may have more limits than a business bank account, such as transaction and deposit limits or not being able to accept certain forms of payments. This is not ideal when you’re trying to get paid for your work.
Avoid the potential hassles all together by setting up a business bank account. Having a business bank account is not only more professional, but it makes it easy for clients to send payments and for you to get paid faster.
Scale your business
If you plan to eventually grow your solo business into a studio, you’ll need to have an easy and organized way to pay collaborators, sub-contractors, and teammates. And just like you expect certain things when clients pay you — paying on-time, receiving full payment, etc. — anyone you pay will expect the same.
Business bank accounts keep everything in one place and make it easier to seamlessly pay your team. Having to transfer money from one account to another can slow down the payment process. But when you can pay your team directly from the same account your client paid you, you’re eliminating a step. The faster you can pay, the happier your team will be, and the more projects you can take on because of that. Maintaining a steady cash flow is the key to scaling your business.
Take control of your finances
At the end of the day, a business bank account offers you more control over your financial planning and is a stepping stone to building wealth as an independent creative.
There are even some bank accounts that offer additional tools to help you manage all of your freelance finances. For instance, on our platform, not only can you set up a free business bank account with no minimum balance, but it also allows you to easily invoice and pay collaborators all in one place. With an all-in-one tool, you don’t have to spend all your time dealing with finances and can instead focus on doing the work you love and take your independent studio to a whole new level.