Few small business owners fail because they lack passion.
Most fail because they lack proper tools and resources. A must-have tool for any new or long-time small business owner is a business savings account.
“But I already have a savings account,” you say.
OK, but ask yourself the purpose of that account. If it’s a personal savings account, then you may be inclined to treat it more casually or fail to stockpile it properly. Until that $5,000 tax bill comes knocking. Reaching for personal savings to meet business obligations is always a slippery slope.
Consider these 5 reasons for why you should open a business savings account:
1. Liquidity is the name of the game.
Small business owners often need quick cash. If it’s purposely and safely set aside in an interest-earning business savings account that’s easily accessible, then you’ll probably get a better night’s sleep. Gone will be worries about cash flow emergencies, tax season or unexpected business expenses.
2. Part of the plan.
A business savings account can and should be an integral part of your overall business plan. It demonstrates contingency planning and shows others who may join your venture later that you’re ready for the long haul.
3. Your savings are safe.
Make sure your business savings accounts are insured by the federal government through the Federal Deposit Insurance Corporation (FDIC). This is especially important in an era of cybersecurity and other online threats. If your business savings account should get hacked and money is stolen, that money is almost always put back.
4. Earn interest.
Like personal savings accounts, business savings accounts earn interest. When considering a bank or other financial institution in which to open a business savings account, pay special attention to the institution’s annual percentage yield, or APY. This refers to the amount of money you earn on a deposit over a year, taking into account compounding interest, or the “interest on the interest.”
5. Future Credit Needs.
Small business owners with a solid savings balance can be a factor when banks evaluate the business for credit. Additionally, banks look kindly on small business owners who can show they have the means and discipline to pay back borrowed money.
Still not convinced why you should open a business savings account?
Partner with Live Oak Bank today and open a high-yield, FDIC-insured business savings account by visiting liveoakbank.com/business-banking. It takes just a few minutes. Or, to speak directly with a Customer Success Manager about your business savings account, call 866.518.0286.