Business Bank Account.
In plain English
A business bank account is a checking or savings account opened in the name of your business rather than your own name. It keeps your company's income and expenses separate from your personal spending, which makes bookkeeping, taxes, and tracking profit far easier. For an LLC or corporation, keeping this separation is also part of protecting the legal wall between you and the business. Banks usually ask for your business registration paperwork and an EIN (Employer Identification Number, a tax ID for businesses) to open one.
01Why it matters
Mixing business and personal money in one account makes tax time a nightmare and can weaken the legal protection your LLC or corporation is supposed to give you.
02The math, step by step
You start a freelance design business as an LLC. Instead of having clients pay your personal checking account, you open a business checking account, deposit the $4,000 from a client there, and pay for your software and supplies from it. At tax time, every business transaction is in one place instead of tangled up with your grocery and rent payments.
03What this is NOT
A personal account can technically receive business income, but it is not a business bank account. Only an account opened in the business's legal name counts, and using a personal one defeats the separation that protects you.
04Receipts
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Plain-English answers from our glossary. Receipts included. Never advice.
Educational tool. Answers come only from ClearMoneySchool's published glossary and are not advice. Why we never give advice