Fox Business recently offered several reasons for the owners of small enterprises to open business checking accounts.
A key benefit of keeping separate personal and business checking accounts is that it's easier to differentiate personal and business expenses when an accounts payable audit is conducted on the company by the government.
"If a business owner uses his personal account for business expenses, it's harder to distinguish business and personal purchases and substantiate them in the event of an audit," Jennifer Rempe, lead tax research analyst at The Tax Institute at H&R Block in Kansas City, Missouri, told the news source.
Using a personal account expands the corporation's liability, allowing creditors such as the Internal Revenue Service to go after owners' personal holdings to collect business debts.
Business checking accounts can have multiple signers. However, personal financial liability can increase for company owners if employees with access to the account embezzle or make good faith mistakes. Conducting regular internal AP audits can help identify and mitigate both accidental and deliberate losses.
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