At some point in your work at home career, you may be considering opening an additional savings account to help deal with expansions in your personal or business finances. With some exceptions, opening individual savings accounts for separating business and personal money is usually a good way to go. Here are some reasons why it pays off to start up a completely different savings account for specific business or personal use.
- Solid Numbers - When you put all of your personal and business accounts together, your overall totals tend to get confusing. Having a separate savings account not linked to other accounts lets you see exactly how much money you have allocated for one specific purpose, and that can be a real help when you're making the "bird's eye" financial decisions.
Tax Transparency with Small Business Savings Accounts - Lots of tax prep professionals recommend having a separate small business account in order to show where your business expenses come from. Using a separate card and account for your small business can really help you define the operations of that business to make your tax filing easier or cut down on some liabilities related to an audit.
- Higher Interest Rates - When you take out a separate savings account for a large block of money, you may be able to get access to higher interest rates for that amount. Higher interest allows you to gain more money on the capital that you already have, whether it's tagged as a business or personal account.
- Different Banks - Not all banks are created equal, and not all of them handle different checking or savings accounts the same way. You might have a bank that you love for your day-to-day personal transactions, with great online banking, friendly tellers, and all of the rest. However, that bank may not provide you with the low-fee, high yield savings account options you want. That's why it might be good to keep separate accounts at separate banks.
- Non-Linked Savings Accounts - Linking savings accounts is kind of a double-edged sword. On one hand, linking all of your accounts together can help you avoid some bank fees related to a minimum balance. On the other hand, with some account setups, it's too easy to back up your checking account with savings, and you can find that money tends to flow out more quickly through linked accounts. One solution is to set up a completely separate non-linked savings account for your "core money."
In addition to these reasons for setting up independent savings accounts, there's the idea of eventually using your saved capital for investments. You may want to invest in your own business, or put your money into some long-term opportunities that will eventually produce a higher yield than the interest rates associated with conventional savings accounts. For any of these strategies, having multiple accounts can help make necessary transactions smoother. Think about how building a better financial account portfolio can help you streamline all of the decisions you have to make about your money.