Business accounts for february 2025

Accounting for small businesses entails keeping a detailed record of all revenue and spending and properly extracting financial data from business activities. This essential task assists small business owners in properly tracking and managing their business finances, especially in the early stages. Small business bank accounts keep you informed of your company's past and current performance and aid in generating invoices and completing payroll. Open a business account when you're ready to start taking or spending money for your business. A business bank account keeps you legally compliant and safe. It also has benefits for your customers and workers. Discover why you should have a business bank account and how to get one.

What is a business bank account?

A business bank account is exclusively used for commercial transactions, not personal funds. It can be opened in the company's name, allowing payments to be processed and received in that name. Business bank accounts function similarly to personal bank accounts. However, corporate account holders frequently have access to services that personal account holders do not, such as:

• Carrying out foreign currency transactions.
• Doing credit checks on other companies and suppliers.
• Handling salary payments.

Business bank accounts are normally offered to single proprietors, partnerships, limited liability corporations, and other forms of businesses. Business current and savings accounts are two types of business bank accounts.

Types of business bank accounts

Business bank accounts, like personal banking, come in various shapes and sizes. Depending on your requirements, you may need to establish multiple accounts. The examples below are business bank accounts your firm can open at different financial institutions in the Philippines.

Checking account

This is the most prevalent sort of business bank account. It enables businesses to track all cash transactions to assess their profitability. You will use the money saved therein for the day-to-day operations of a firm. Every bank offers many sorts of checking accounts. As a result, before signing up for one, it is critical to investigate the finer points to verify it meets your requirements.

1. Benefits/uses of business checking accounts. Although a business checking a bank account is not compulsory, having one is a good idea. Consider the following five benefits of a business checking account:
2. Your business's records will be well-organized. A business checking account can help you arrange your small business accounting financial information. Your personal and company transactions are kept separate with a checking account. Every company's transaction is recorded on a separate statement. Separating your business and personal transactions allows you to keep track of your company's performance. For example, suppose you examine your company's checking account statement for the previous month. According to the statement, your company earned ₱500,000 and spent ₱100,000. To obtain a net profit of ₱400,000, divide ₱500,000 in profits by ₱100,000 in company expenditures. The bottom line of your company's checking account statement is the net profit (₱400,000). Calculating profit margins could be difficult if you combine personal and corporate transactions in one account. To determine your profitability, recall which costs were personal and eliminate them.
3. You will pay the correct tax and make the correct deductions. Separating commercial transactions into a checking account does more than just help you keep track of your business finances. A business checking account also makes it easier to submit taxes. To file business taxes, you must keep your commercial transactions distinct from your dealings. A business checking account will help you submit your taxes correctly. You examine your company account statement and enter the numbers on your tax return. When you combine personal and business expenses in the same account, it becomes more difficult to file taxes correctly. If you do not submit your taxes correctly, you could incur fines from the Philippine Bureau of Internal Revenue. Business costs can be deducted from your tax return. Deducting business costs may be easier if you use a corporate checking account. You must demonstrate to the Bureau of Internal Revenue that the costs were for business purposes. The business financial statements prove that you can deduct company costs.
4. You can accept credit card payments. You limit your consumer base and potential sales by exclusively taking cash payments. Many customers prefer to pay using credit cards rather than cash. Accepting credit cards allows you to service more clients. You can set up a credit processing system with your company checking account. Alternatively, you might link your company checking account to a merchant account. You may be required to pay a fee to the bank to accept card payments. However, you can profit from not operating a cash-only firm. Before you sign up for credit processing services, look into the maintenance and transaction costs.
5. You can have multiple business account signers. A company checking account can have several signers. In other words, you can authorize anyone to use your company's checking account. An employee can do certain administrative banking chores while you operate your firm. This could allow you to devote more time to elements of your organization that generate money. Be cautious about who you grant access to if you enable anyone to use your corporate checking account. Make sure you trust everyone who handles money for your business. Remember that if you are a sole proprietor, you must open a business checking account using your Social Security number. Your Social Security number is accessible to everyone who uses your business checking account. Trust is crucial for sole owners that allow staff access to their bank accounts.
6. You appear professional and build bank ties. Whether your business is new or established, you want to appear professional. Do you write checks with your personal information on them to pay vendors? Or do you instruct consumers to make payments in your name? A corporate checking bank account gives you a more professional appearance. Opening a company checking account will also assist you in developing bank ties. Relationships with banking experts will assist you in growing your firm. A small business loan, for example, may be appropriate if you require funding. A good working connection with your bank representative may help you obtain better loan conditions.

Savings account

A savings account is a good choice for your business if you have excess income and want to earn interest on your assets. This is where businesses can keep cash that isn't needed for day-to-day operations and earn interest on it. Depending on your bank, you can choose from various savings accounts. Before creating an account, inquire about your options. You are not required to put huge sums of money into a savings account. Instead, save as your business develops. Small deposits may not appear to be significant at the time. However, as you save, the account will progressively grow. A savings account is used differently by each firm. Some experts recommend that you begin by conserving 10% of your profits. You can reduce your savings after having a significant monetary buffer. Put money into a business savings account as part of your business budget.

Benefits/uses of business savings accounts

Though companies don't need a savings account, it may be a smart idea for you. To help you decide, consider the following five perks of a business savings account:

1. It helps you prepare for unexpected events. As a small business owner, you understand how difficult it is to plan for unforeseen situations. However, unplanned expenses are unavoidable. A business savings account provides you with a cushion to deal with unexpected costs. Savings accounts for businesses are liquid assets. You can use the cash in your savings account to pay bills immediately. You can effortlessly transfer funds from your savings account to the individual or corporation to which you owe money. The simplest approach to making payments is to use liquid assets. Your spending account is least affected by liquid assets.
2. It helps you save for tax payments. Throughout the year, you are preoccupied with operating your business and are not concerned with paying taxes. But what if you fail to set aside money for taxes? When focused on business operations, it's easy to forget to save for tax obligations. If you solely use a checking account, you might not have enough cash accessible during tax season. Saving a tax-paying reserve in a business savings account allows you to keep the money for taxes. A savings account reduces the requirement for tax payments to be budgeted in the same account as ordinary business costs.
3. It helps you earn interest. Simply maintaining funds in a business savings account might earn you extra money. The interest rate on a savings account is often modest. The interest rate is usually less than 1%. Inquire with your bank about the possible interest rates. Because a business checking account does not yield interest, consider transferring some cash to a savings account. Even if you just acquire a modest amount, interest might build up.
4. It helps you add to your retirement funds. Saving a small amount of money in a business savings account can help you save for retirement. You can use the savings account with existing retirement plans, such as PERA. A business savings account also gives you additional security if you decide to sell your company. The market may make it difficult to locate the perfect buyer when it comes to selling. Alternatively, your small business appraisal may result in a lower value than you anticipated. If the sale of your firm does not proceed as planned, you can fall back on a savings account.
5. It helps protect your funds. The funds in your business savings account are safe with the bank. The Philippine Deposit Insurance Corporation (PDIC) insures savings accounts. The PDIC insures you up to a maximum of ₱500,000.

Merchant account

This sort of account enables businesses to accept various consumer payment methods. Businesses with merchant accounts will be able to handle payment card operations such as debit and credit cards. This agreement is between the acceptor (the company's owner) and a merchant purchasing bank (the financial institution that handles debit and credit card transactions on the merchant's behalf).

Benefits/uses of business merchant accounts

Cash and checks are becoming increasingly unpopular with your clients, while internet payments and credit and debit card payments are increasing in popularity. A merchant account, or an account that allows the holder to accept payments in various ways (usually debit or credit cards), will help your business take advantage of these opportunities and provide value to your company in various ways. The following are the top five benefits of having a merchant account.

1. It accepts credit cards. Accepting credit and debit cards is one of the essential benefits of having a merchant account. Credit and debit cards continue to gain popularity among customers, becoming the new standard. Businesses that value the customer experience frequently discover that removing any friction in the purchasing or payment acceptance procedures will help them gain new customers and boost cash flow.
2. It increases sales. Several studies and research over the years have proven that when customers are offered the choice of using credit cards instead of cash, they spend more. Indeed, according to a community merchants study, 83% of small companies who took credit cards witnessed an increase in sales in one poll sponsored by Intuit. This increase might directly influence your business's sales and overall growth.
3. It offers better money management. Accepting credit cards and transitioning to online payments simplifies how your business conducts transactions. Electronic payments, rather than counting cash, can help you stay organized and improve cash flow management and forecasting.
4. It helps avoid bad checks. Your business will avoid the inconvenience and expenses of rejected checks by using merchant account facilities and accepting electronic payments. Furthermore, when combined with a full payment system, your merchant account will allow you to accept ongoing payments for services you regularly deliver (classes, landscaping, cleaning, etc.).
5. It offers customers convenience. A merchant account could lead to delighted (and returning) consumers merely by allowing them to make purchases in various ways. Whether with debit or credit cards, electronic payments through a shopping cart for your business, mobile transactions, or recurring billing, your customers will appreciate the convenience of shopping with you.

Credit card account

A business credit card is a particularly developed card for business owners and provides perks tailored to their business needs. Business cards often have higher credit limits, better rewards potential, expense management capabilities, and staff cards. A corporate credit card might be used for emergencies or other things for your company. The main advantage of a credit card for startup entrepreneurs or those with weak credit is that it can help develop or enhance your company's credit score.

Benefits/uses of business credit card accounts

Money may not solve all of life's problems, but it greatly helps businesses. Having access to adequate liquid money allows your business to remain flexible in changing market conditions, addressing urgent demands while also allowing you to make wise long-term investments. If you're like many sole entrepreneurs, you may wonder if it's better to apply for a business credit card or if your credit card would suffice. The following are four benefits of business credit cards that can help your business flourish.

1. Increasing your business's credit score. When it comes to financing, new businesses have a completely blank slate. Isn't that wonderful? Not at all. Lending institutions are unsure what to assume without a credit history. They have no idea if you will be able to repay a loan. This can make obtaining financing more challenging. A business credit card could be extremely beneficial. By employing it regularly and paying on time, your organization creates an excellent credit rating that grows over time. There is no better way to get started if you want to be eligible for long-term loans in the future.
2. Obtaining greater financing and better terms. Individual credit cards cater to individuals' spending preferences, typically lower spending levels on technological devices and home furnishings. This credit limit is just insufficient for many businesses. Inventory purchases on a weekly or monthly basis might quickly deplete available funds. Credit cards for business usage have substantially larger spending limits to cater to typical company expenses. Taking care of frequent purchases isn't an issue when you have access to ₱1,500,000-₱2,500,000 or more. Furthermore, this business financing may include interest-free payback durations of 30, 60, or 90 days. This longer grace period gives you more time to invest in your business.
3. Taking advantage of business-specific benefits. Personal credit cards provide benefits such as miles redeemable for free flights. How do your business possibilities compare? In many circumstances, they outperform other forms of credit cards. Business credit cards provide:
• More travel benefits.
• More miles.
• Higher cash-back percentages.
• More attractive sign-up incentives.
4. Creating custom spending limits. You can also use your business's credit cards to track employee spending. By granting each manager or department access to a separate card, you can see where the money is going and what it is spending on. You will even be able to establish specific spending limitations for approved users. Having a business credit card account policy inside your firm is also beneficial to hold staff accountable for credit card use.

Most business bank accounts let you handle your business funds professionally and keep them distinct from your personal affairs. It takes more work to open a company bank account than a personal one. Documents must be gathered, names must be selected, and licenses must be obtained.

The benefits of having a business bank account

Setting up a separate business bank account is an important step in starting a small business. While you may only have one personal bank account, your business will almost certainly require many accounts. According to the Philippines Small Business Administration, most corporate bank accounts provide privileges and bonuses that personal bank accounts do not. Here are four reasons why a company bank account is necessary.

1. Purchase protection. As a commercial banking alternative, several banks provide merchant accounts. Merchant services are a commercial benefit since they secure your clients' personal information while protecting their purchases.
2. Limited liability protection. By keeping corporate funds apart from personal funds, commercial banking helps restrict your responsibility. You should always keep your personal and business finances separate, regardless of the business you operate. A separate bank account is a first and most critical step toward properly separating your money.
3. Professional customer support. Most business bank accounts permit checks to be written out to the company, which is more professional than having consumers write checks to your name. Customers can also pay using credit cards, and staff can undertake banking activities on the company's behalf.
4. Mutliple credit options. Some banks provide a line of credit that you can utilize in an emergency. Many also provide credit card accounts, which you could use to begin developing a credit history for your new firm.

Considerations when selecting a bank for your business account

Small business owners have several financial alternatives, and each bank provides something unique. Take your time looking through the numerous possibilities until you locate the best bank for your company. Always compare prices. Banks are just as eager to get new clients as they are to maintain existing ones, so take advantage of this to receive better offers. Here are some things to think about (and inquire about) while you compare banks:

• Account maintenance requirements. Business bank accounts frequently have conditions that must be met; failing to do so may result in fines. For example, banks frequently require you to maintain a careful balance - although this minimum amount varies per bank and maybe a monthly minimum or a yearly minimum. If you have many accounts, the bank may count them toward a minimum balance or look at each account individually. Instead of maintaining a minimum balance, some banks with business checking accounts may waive the fee if you spend a particular amount on a debit or credit card linked to your account or use one of the bank's other services.
• Features. When evaluating banks, think about which account features are essential. Do you, for example, require a business bank account with thorough analytics? Do you desire a mobile app that allows you to deposit checks digitally? Is a business debit card required? Would it be beneficial to receive notifications when your balance is approaching the minimum?
• Fees. Each bank has its own set of fee structures and benefits. Fees and minimum balance requirements for business accounts are often higher than for personal accounts. Take your time comparing banks with the lowest fees and the most benefits.
• Sign-up bonuses. Inquire whether the bank provides bonuses. Banks may give incentives for creating a business account with them. A bank, for example, may provide ₱15,000 if you create an account and have a specific minimum balance. These offers might be a fantastic opportunity to earn additional money but bear in mind that they are taxed.

Opening a business bank account

The financial system in the Philippines is more cumbersome than that of the United States and other Western countries. There are additional criteria for opening a business bank account in the Philippines. Foreign nationals must present extra papers and identity, including an Alien Certificate of Registration from the Bureau of Immigration, which takes time to get. You may find many commercial banks across Metro Manila and other prominent places in the Philippines.

In addition, these banks have branches in hundreds of provincial capitals and rural locations around the country. Except for sole proprietorships, obtaining a business bank account is the same procedure as opening a personal savings or checking account. If you are a sole proprietor, you must use your social security card rather than your EIN. Sole proprietors must still provide their business license, DBA certificate, and personal identity documents.

Documentations needed to open a business account

It would help if you had the following papers ready before opening a business bank account:

• Business licenses.
• Articles of incorporation.
• Doing business as (DBA) certificate.
• Identification documents.
• Employer identification number (EIN).

Small business owners need to consider several issues when creating a business bank account. Preparing the relevant paperwork from the start is critical to ensure a smooth procedure. Below, you can find more information on the paperwork requirements to create a business bank account.

Business licenses

Banks will almost certainly want your current business license proof that you can legally conduct business in your area. This guarantees that your business is held accountable for all acts, including taxes and financial transactions. Check with your state and local provinces to see if any permits are required to run your business.

Articles of incorporation

Your articles of incorporation demonstrate to the bank how your company is constituted, and you use these legal papers to register your company with the province and other institutions. Suppose you start a business as an LLC, limited partnership, corporation, or other distinct legal entity. In that case, you will require the articles of incorporation you submitted with the province if you are a single owner to open a bank account.

Doing business as (DBA) certificate

A DBA, sometimes known as a fictitious name, permits you to do business, such as marketing or advertising, or collect money under a name that differs from your company's current name. Because entrepreneurs are not permitted to use their accounts in their business name, most banks demand a certified copy of a DBA to open a business bank account.

Filing for a DBA allows companies to conduct business under a different name without forming a new corporation. For example, imagine an entrepreneur named Cruz Bautista. Cruz is a solo entrepreneur who operates his own business and wishes to launch Cruzie Chips, a sandwich store. Cruz prefers to conduct business under the Cruzie Chips brand rather than his name, Cruz Bautista. As a result, he would need to apply for a DBA to conduct business under this name, including receiving and signing cheques made out to and on behalf of Cruzie Chips.

Identification documents

A government-issued photo ID, such as a driver's license or passport, can be used as evidence. This is used to confirm that the small business owner is the individual who owns and operates the relevant business.

Employer identification number (EIN)

If you are the sole owner, you must have an EIN, your Social Security number, and a driving license or passport. In addition, EINs are used to combat identity theft, fraud, and money laundering. While some banks may allow a single proprietorship to open an account without an EIN, it is still advantageous to have one. The EIN is required to manage taxes and pay employees. Sole proprietors can use their social security number instead of an EIN for company tax purposes. Filing with the Bureau of Internal Revenue allows you to receive an EIN for your business.