4 Banking Tips to Help Your Small Business Thrive
Happy National Small Business Month!
Since opening our doors in 2007, we’ve had the privilege of working with many small business owners across New York City, helping them to reach their goals, understanding their needs and offering solutions with transparent business banking offerings.
As a community bank in New York, we love that this month provides an opportunity to support even more small business owners, starting with these essential business banking tips:
1. Separate Personal and Business Finances. Open a Business Bank Account.
One of the major hurdles in successfully managing a small business is achieving financial stability, so being meticulous with your finances is a must. The best way to accomplish this is by separating your business and personal finances and opening a business bank account.
Why does this matter? For one, it makes money management a breeze. Instead of scrolling through your personal checking account transactions, all of your business transactions will be in one place, allowing you to stay on top of your finances. It also makes all the difference during tax season. Small business owners need to file independent of their personal taxes and have the opportunity to claim business deductions, which requires keeping a paper trail of business expenses. With a business bank account, you can easily back up any claimed deductions in the event that you’re audited.
Plus, if you plan on applying for lending or a line of credit, opening a small business checking account is a prerequisite to establishing business credit.
2. Monitor Your Cash Flow Regularly
Opening a business bank account is the first step in your banking journey. Once you’ve chosen the best account for your business, you’ll want to regularly track incoming and outgoing funds. Keeping an eye on your cash flow helps helps you avoid any financial surprises.
Our small business bank accounts include free access to Autobooks, a built-in accounting and bookkeeping solution. Tools like Autobooks assist with cash flow management, automated reporting, invoicing, and much more.
3. Build Business Credit
Yes, your small business has a credit score too! Similar to your personal credit score, your business credit reflects your company’s history of borrowing money and paying it back on time.
A good credit history increases your chances of approval for lines of credit and SBA loans, and also helps in securing better financing terms. To establish business credit, you need to start by incorporating your business (ex: form an LLC, S Corporation, or C Corporation), obtaining an EIN (federal tax identification number), and opening a business bank account. Then, you can build your credit by establishing a line of credit. With monthly, on-time payments, you will see your credit score increase, getting you ready for additional capital when the time is right.
4. Take Time to Plan for the Long Haul
Running a business can easily keep you occupied with day-to-day operations, and littletime for future projections or goal setting. Build the time into your calendar every month to plan ahead. Consider where you want your business to be in the next six to 12 months, including the capital you’ll need to get there.
For example, you may find out that moving into your own location and buying your property is a longer term investment for your business than renting. But, preparing documentation for a commercial real estate deal takes time. Don’t delay your business growth. Grow your business by taking time today to think about tomorrow.
We Are Here For Your Small Business Journey
Whether you’re new to business banking or looking to strengthen your banking practices, use this month as an opportunity to take your business to the next level and build better habits for the future. If you’re looking for a new banking partner, we’re here to be part of your journey, committed to supporting your business with a variety of business bank accounts and lending options tailored to your needs.
In addition to our transparent small business banking solutions, we encourage small business owners to take advantage of free resources for business planning, like SCORE’s templates and webinars through the Small Business Administration (SBA).