Now a day there is a debatable issue regarding the bank accounts. When we talk about the finance and cash flow of our affairs, it comes to hear that we should maintain a separate bank account for our business instead of using our personal account for our business purposes. The points that I would like to discuss here is that why we need a separate business bank account for our work, commerce or related affairs? Is it prohibited to use your personal bank account or your business purposes? What are the draw backs for using the personal account for your business purposes? Here below we shall discuss these entire questions in detail but in short.
First of all I would like to clarify that this is not an essential to maintain a different business account for your work corporation. You can use your personal bank account for your business matters only if you are running a small scale business and you feel it convenient to use your personal bank account for your work matter.
When we start a business we utilize a specific amount that is of course provided by the owner, although the owner is the only person to whom all the finance of a business belongs to. But if we use the personal account of the owner for his racket affairs there will be a very confusing situation when we would be in need to reach the business revenues and expenses. We shall never be able to reach the exact figures of the business. It shall be very hard to identify the business expenses among the personal expenses of the owner. We shall never be able to reach out that either the entreprise or commerce is doing good figures, better or bad figures. But if it comes to partnership or corporate level business entities, it is a requirement by the IRS to maintain the separate business bank account for your business affairs so that the exact figures can be extracted for taxation purposes.
One more reason behind maintaining your best business bank account separated from personal account is the accounting concept which is known as "separate entity concept" which explains that the business and the business owner are two different bodies. This concept separates the responsibilities of a business from the responsibilities of the business owner. In this way if the business entity ever goes solvent only the business assets will be taken into consideration. So in such a situation the personal account of the owner will never be looked for raising the funds of a solvent business.
When we use to be in a business environment we use to practice specific circulation of funds. It is not necessary always to utilize the funds that only belong to the business. Sometimes the business goes out of funds. In such cases what should be done? Should the business go to the silent phase and wait for funds that the owner will generate in unexpected time limit? Can it be possible to stay out of market for a while jus for waiting for necessary funds? No, definitely this can't be happened. May be we shall never have a second chance to step in the business market. In such situation we take credit figures from banks and many other financial institutions to keep the business running smoothly. So the banks and financial intuitions provide loans to the business entities. For getting this facility it is highly recommended to have a business bank account.
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