Business bank accounts are worth their weight in headache medication.
- Business bank accounts can be opened by any business owner, even sole proprietors with small side hustles.
- Organizing your personal and business expenses in separate bank accounts can vastly simplify your taxes and general accounting.
- Many business bank accounts also come with welcome bonuses that can be worth hundreds of dollars.
There’s something about the title “business owner” that conjures images of suits, offices, and TPS reports. But anyone can be a business owner, even if their business is simply a small side hustle.
Similarly, business bank accounts sound like fancy corporate trappings reserved for the major players. In reality, however, even sole proprietors can open business bank accounts for their small — or, in my case, tiny — businesses.
And that’s what I did. At the point my side hustle was turning enough of a profit that Uncle Sam started to show an interest, I opened an account.
The tax-time easy button
My primary reason for opening a business bank account dedicated to my side hustle was to make tax time easier. Rather than sort through deposits in a mixed account, separate accounts made it easy to see the deposits associated with that business alone.
For those who have a regular W2 job in addition to a side hustle, having a personal account and a business account makes a clean separation. You can have your paychecks deposited into your personal account — perhaps a high-yield savings account so you’re getting the benefit of interest — and your side hustle income deposited into your business account.
In my case, I have both my primary small business — and my side hustle business. This means I have a personal account, for my household bills and expenses, as well as business accounts for each source of income.
I’ll note that I do keep spreadsheets tracking invoices and expenses for, well, everything. But having the income for each aspect of my financial life means I don’t waste time parsing which transaction belongs to which category.
A whole new world of account bonuses
Although financial organization is certainly my primary drive for opening business bank accounts for each small business, it’s not the only reason. As an enthusiastic rewards collector, I’m also highly motivated by the new account bonuses.
Just like credit card sign-up bonuses, many banks offer welcome bonuses for opening new checking accounts. (And yes, this applies to business accounts as well as personal ones.) Some of the best bank account bonuses I’ve earned over the years were worth hundreds of dollars in cash back.
Now, you won’t earn most bank bonuses simply by opening an account. You’ll need to meet specific requirements that vary by bank and account type. Some of the most common requirements often include:
- Meet a minimum deposit requirement
- Make a set number of debit card transactions
- Receive direct deposits totaling a certain amount
- Maintain a minimum daily balance for a set period of time
As an example, a recent bank bonus I earned required me to make 10 debit card transactions within 90 days and maintain an average daily balance of $5,000 for the same period. For my trouble, I earned $300 in cash back that was automatically deposited into my account two weeks after I met the requirements.
Keep it clean
Having a profitable side hustle is a great way to augment your income. But it also opens a can of financial worms that can make your life much more complicated. Keeping your income and expenses as clean and organized as possible limits the somewhat inevitable headaches that come with juggling multiple income streams.
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