When you open a small business it’s easy to think that you’re going to be a banking pro. You’re basically an expert at personal banking, after all, so what can be so different about small business banking? Turns out, plenty. Getting a strong grasp on your small business finances early on will make your life a lot easier in the long run.
Here are the basics of small business banking:
1. Choosing a Bank and Getting Started
When finding a place to open an account, keep in mind that all banks are not created equal in terms of catering to small business needs. Today, big banks are offering small business loans and adequate small business financing options, but small banks have typically always been big supporters of small business. Once you choose a bank that suits your needs, make a point to create and maintain a relationship with your banker. Trust me, you’ll have plenty of financial questions that pop up in the course of your business’s life. You’ll feel thankful to have a good relationship with your banker.
Additionally, don’t forget to keep your personal and business accounts separate. Mixing your accounts can lead to confusing bank statements and tax forms, and can also put your personal credit at risk.
2. Securing a Loan
Once you open your business bank account, you’re probably going to be looking for some funding to get the ball rolling. A popular form of funding is a small business loan. There are two types of business loans: secured and unsecured.
Secured loans use collateral to ensure repayment, and unsecured loans don’t involve collateral, so are generally used for smaller-scale accounts.
In order to get a loan from your bank, you’ll need approval from a lender. To gain this approval you’ll need to provide a business plan, credit report, and relevant references. Be sure to keep your business plan detailed, including your intentions with the money loaned and a realistic estimation of your business’s revenue.
3. Staying Organized
So you’ve chosen a bank that suits all your small business needs, and you’ve even scored a loan to get started. Now you need to keep on the right track to keep your finances neat and organized. Monitor your spending by keeping your receipts. Not only will saving your receipts save your life come tax season, but it’s important to be aware of what you’re spending your money on on a daily basis.
Another great organizational tool is mobile banking. Keep track of your finances in a way that’s convenient for you. Don’t let not being able to go into the bank keep you from staying organized and on top of your finances.
Deborah Sweeney is the CEO of MyCorporation.com. MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best. Follow her on Google+ and on Twitter @mycorporation.