While operating the business, it is vital to know how convenient and fast payments between your partners and clients would be arranged. To smooth the transaction process, opening a company bank account is essential. Having one makes it easier to track expenses and income. It is a professional way of running a business.
After naming the business, a business bank account is an asset business owners obtain on their business setup in Dubai. The reasons you need a separate bank account for your business include the following.
Too Many Transactions for the Personal Account
When starting a business, it might seem fine to run the business transaction via a personal account. However, as the business grows, you would require an account dedicated to your business specifically. You would understand that is the time for making the decision when the business reaches the point where the business transactions are greater than the personal transaction’stransaction’s amount.
Opening a company bank account would make it easier to manage the business. You could collect receipts and write checks for the expenses as well. All that would be easy to manage if you try to do this through your personal account.
Preserving the Limited Liability
Opening the bank account as a Limited Liability Company (LLC) could effectively protect the owner’sowner’s liability. As the LLCs are separate entities from individuals, the business owners could not be held responsible for debts that the company might accrue. However, in some instances, owners, stakeholders, or members are held liable for company debts, i.e., piercing the veil.
As a result, the owners’ assets, like personal investments or homes, could be used to pay off the debts of the LLC. It is important to note that small LLCs are vulnerable to having the veils pierced because of corporate practices and their size. Therefore, LLCS must strictly follow the rules related to the formation as well as the governance of the company strictly.
In case you wish to lessen the risk of putting the personal assets in danger in event of the lawsuit, consider adopting protective legal measures. One of the critical things you could do is keep the company’s bank account separate from your account during your business setup in Dubai.
Improving the Image of Business
It is worth noting that in business, image plays a vital role. If you are writing the checks from a personal account, it will not help the business image. It would make it appear like you started the business just a few weeks ago. Remember, that image would not convey strength or build confidence with clients and customers.
The dedicated business account would show that you are open for the business. The name of your business appears on the checks and other payment methods and gives customers and clients the sense that you would stay.
Accepting Credit Card Payments
It is one of the key reasons why you wish to have a business bank account. As you expand the business, you need to start accepting credit card payments as the world trades using credit cards. It is important to understand that you cannot accept credit card payments through your bank account.
This could happen only with the commercial account. Such accounts are set up to accept cards only. Opening a company bank account could make the card process seamless. That is what you would require.
It would help if you kept the personal & business expenses as well as income separate for tax purposes. Tracking the business deposits and purchases in a separate bank account could help manage the budgets and financial transactions easily. If you use the check book of your account for personal and business transactions, it could be a mess.
The such mess could be costly when the tax season rolls. Moreover, using a personal account to manage business transactions would make a business seem like a hobby. In the case of an audit, it would become a difficult job as you would need to check every single transaction to set the business apart from personal.
Therefore, having a separate bank account during business setup in Dubai is crucial. It would make it easy to show all records to the accountant. Remember, you need to file the business transactions in different forms from the personal tax information.
For Entering Partnership or Incorporation
When you enter into the partnership, at least one partner will handle business transactions. You would require a bank account for the business, as all transactions could not be done with a personal account. The key reason is that you would not wish to provide access to your account to a partner or any other individual.
It is similar in case you incorporate the business. Not only might you have other individuals requiring the ability to access the bank account; however, there are legal ramifications to sharing access to the account. As a corporation is a separate legal entity from the owners; therefore, consider opening a company bank account.
Apart from these, another reason could be building business relationships. Just like setting up an account for handling payment of sales, income, or taxes, you would also require one for credit purposes. It could include obtaining financing for expanding the business or purchasing equipment. You would certainly wish to have a business credit card. Developing business banking relationships would make all that easy to obtain.