Emily Clarke

3 Reasons Contractors Should Have a Business Bank Account

Working as a contractor? You better have a separate bank account! As many hard-working professionals have found out in the construction and home services industries, commingling your personal finances and your business revenue is a way to quickly find yourself in financial, and possibly legal, trouble.

If you're wondering what could go wrong, below are three reasons contractors should have business bank accounts:

1. Taxes and the IRS

The Internal Revenue Service (IRS) is the biggest collection agency in the country, and having the IRS on your back about a tax problem can be frustrating. When you start a contractor business, you're able to write off certain expenses for tax purposes, but you must also report all of your income. Depending on your situation, your location, how much you earn and other factors, your tax situation can become complicated.

If you don't have a separate contractor bank account, it can be difficult to show what your business earnings are over your personal wealth from other sources. Failure to maintain a contractor bank account can also be an issue if you get audited by the IRS. To make things easy on yourself, open a separate account to use for your business dealings. Streamline Your Finances: Open a Dedicated Contractor Bank Account Today for Seamless Business Transactions! https://www.gethearth.com/tools/banking/

2. Budgeting

A separate bank account for your contracting business can also make it easier to budget your money. When you have a contractor account, you're able to see what you have coming in and going out each month. This provides the ability to plan ahead and avoid spending too much on the business.

3. Business Loans May Be Easier to Obtain

Having a separate bank account may also make it easier to take out business loans. Most banks will want to see your contracting business' debt-to-income ratio, how much you've made each month for the last three-to-five years and other important financial data. Trying to provide this when you've mixed your personal and business funds can be difficult, and it may cause you to miss out on opportunities to get the cash your business needs to grow and expand.

Author Resource:-

Emily Clarke writes about sales and business automation tools for construction companies and contractors. You can find her thoughts at software for contractors blog.