Setting up a Business in Hong Kong is Easier With its Own Bank Account
When you start a business, one of your first tasks is to set up a bank account for it. You should have a separate bank account for your business because it should not be with your personal account. You cannot just have a separate record. What you actually need to do is to keep the money separate physically in several bank accounts, one of them should be a checking account. There are business owners who even use a different bank because they really want to separate their personal and business accounts to manage funds better. This is why when you have a business in Hong Kong, you should have a separate account for it.
If Your Business Transactions are Becoming Too Much for Your Personal Account
A personal account would still make sense if you are just starting out, but when your business starts to experience growth, make a different account for it. You will pretty much know when it is time for you to make a decision. This is when it reaches a point where business transactions are more than your personal ones. A separate business account makes it easier to manage your business. This account can easily collect receipts, and write checks for expenses. That is going to be a lot easier to manage compared to if you are just trying to do everything through your personal account.
Having a bank account for your business gives it more credibility with customers and future investors which is very important when your business is starting out. If some of the customers pay your invoices using cheques, it is a lot more professional to have them write it under your business name. The same goes for paying your invoices using a separate business credit card. In case you want customers to write the cheque under your business name, you must have a business bank account.
Personal Identity Protection
Since you are going to use the business account for big transactions, you will not have to worry about the potential of fraud or identity theft. A dedicated business account lets you limit the damage done to that account. The business account will be even more effective if you can give your employer ID number. That number can be used for a bank account instead of the Social Security Number which will deny potential theft in your whole financial life.
A business account is also significant to tax purposes. One way to get the attention of the tax agency is to commingle your personal and business expenses with your bank accounts. Having a bank account for your business gives a clear sight of the business revenue and expenses in case you get audited. Since it is advisable to have a separate account for businesses, it is especially important if you have a corporation. Corporations are considered a separate entity so the owner(s) personal assets are protected from potential liability.
Although, in some cases, the court might disregard the concept of a separate entity and hold the company owners personally liable. This is called “piercing the corporate veil”, and criteria that might be used to figure this level of separation between the owners’ activity and the business. This is why a business account for a corporation is important.
You want your business to always look professional. If your business finances are separate from the personal one, it is helpful in improving how professional your business looks. This means that once you write cheques, they will see that the cheques are from a real business. When you pay your taxes, they will see the tax payment is coming from a legitimate business.
It is Good for Creating a Business Banking Relationship
While your business is growing, a business relationship with the bank where your account becomes more important. For instance, you might want to have a dedicated account where the income payment, payroll taxes, or sales will go through. This can include getting a bank financing to buy equipment or grow your business.
In addition, you are going to want a business credit card, especially if you are handling employees or have business partners. Establishing a specific banking relationship for your business is going to make it easier to acquire.
Bookkeeping is Clean and Precise
Think about it if your checkbook and bank statement are going to mix personal and business transactions; it will get very confusing. Imagine that during the year, it is something that happens. That is what you need to deal with the income tax if your personal and business finances mix.
No one would want to handle that kind of a mess. If there is a separate account for your business transactions, you will have a record that is clean and easy to understand when the year ends. Remember that you should keep your invoices and receipts. Make sure they will match your checkbook and entries in your bank account. This puts your business in good shape when it is time to pay for your income tax. Your accountant will not have a hard time keeping track of your record and they can easily do your taxes for you.
If you have a business in Hong Kong, you should have a business accountant because it is really crucial if you want to succeed. In addition, it will be beneficial in helping the business grow and you will earn more money because of it.