Why You Should Open a Savings Account for Your Business

When you were a child, your parents opened your first savings account. As you grew older and took on bills of your own, you opened a checking account for better access to your money. Now, as the owner of a business, you’ve likely opened a business checking account to handle supplier payments and separate business funds from personal ones. To take your business's financial health a step further, consider opening a business savings account. 

If you've spent time as an employee of an established business, you’re familiar with the automatic tax withholding that makes tax season easier. As a small-business owner, however, you're responsible for determining how much you owe in taxes and paying that amount to the federal, state, and local governments. A business savings account can be a great place to set aside the money needed for tax payments. Not only will you earn interest on these funds, but you’ll ensure you don’t accidentally spend them on business investments.

When managing personal finances, your savings account is likely where you keep funds for emergencies, like a job loss or medical crisis. A business can use a savings account for the same purpose. Amanda Cameron of Patriot Software suggests that a savings account is a useful buffer for unexpected costs that could otherwise disrupt or even harm your business. These liquid assets can be accessed quickly to resolve issues, like broken equipment or accidents, minimizing any downtime.

Interest rates are finally on the rise in the U.S., which means savings accounts are starting to earn more meaningful interest. While the interest you earn may vary, the Money Supermarket Financial Group notes that you’ll almost certainly earn a better interest rate with a savings account compared to a checking account. Whether you plan to use the money for emergencies or keep it as a safety net, a savings account allows your funds to work for you. 

Just as individuals can have multiple savings accounts, businesses can benefit from having several. Although managing multiple accounts might seem complex, it’s an effective way to ensure that money is used for its designated purpose. For example, keeping funds for equipment purchases separate from emergency funds helps avoid overspending in emergencies, ensuring there’s enough for necessary upgrades. While this might add a bit of complexity, it provides financial stability. 

A business savings account is generally a sound choice, but there may be other options that better suit your specific needs.  

Connect with a Five Star Bank representative to learn what accounts work best for your business. 

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