Bank Accounts

It's good practice to keep private and company money separate. If you don't, you won't know what is whose. The easiest way to do this is open a new bank account for your business. This also enables you to have a clear record of the money you have transferred to fund the firm. If you've incorporated your firm, you'll be able to use its business name. Your bank will ask to see a copy of the document of incorporation. This is a straightforward task.

The big difference between running a business account and a private account is cost. Whereas banks rarely charge for personal checks, they do for company checks, and for money you pay in, statements, quarterly management accounts, and so on. It's not heinous but it certainly adds up.

If you are just dipping your toe in the water it often makes sense to set up a new private account to keep costs down. Nowadays you might prefer to use a low-cost, online bank. That allows you to pay suppliers electronically.

If you want to have a corporate account, make a point of meeting your bank manager. Pass your project by him and gauge his reaction. Bank managers look after hundreds of businesses and they have a canny knack of knowing what will and won't work. It will cost you nothing and you could come out of it with some excellent, free advice. Other important areas in which bank managers are invaluable include the following:

♦ Providing emergency overdrafts (temporary)

♦ Expediting setting you up with your own credit card handling facilities (discussed later in this chapter)

If these are necessary, it is prudent to set up overdraft facilities at the outset, as they take time. In an emergency you might need the facility immediately.

At your meeting with your bank manager, get a rundown of all the costs associated with the account. Keep a record of these so you can incorporate them into your financial cashflow. When the bank manager has told you what they're getting out of the relationship, get him to explain everything that they can do for you.

Note Another ally is of course your accountant, which was discussed in Chapter 12.

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