Digital Business Banking - The Modern Way To Manage Your Small Business's Finances

April 16, 2021

The stereotypical idea of a small business has changed dramatically over time. Today, even the humblest startups benefit from a well-constructed financial structure, something attuned to the modern fast-paced, interconnected economy. A digital bank account can provide an excellent first step in that direction.

Think of the Main Street USA version of a startup, something you’d find several decades ago. A small shop might have relatively simple finances. The owners could get by with an account at the local savings and loan and an empty mayonnaise jar under the bed for emergency funds.

Things are different in the 21st century. Today, that same small shop owner will likely leverage powerful financial tools to stay relevant. They want to receive customer payments digitally and to connect with suppliers from around the world. These business owners also need to track and to move their money in an instant.

Today, even the humblest startups benefit from a well-constructed financial structure, something attuned to the modern fast-paced, interconnected economy.

More than that, the gig economy has made small business owners out of many people who, twenty years ago, would have operated as standard employees. The definition of “startup” keeps changing to include a wider group of entrepreneurs. These sometimes unsuspecting small-business owners are also looking for ways to make their professional lives run more efficiently.

A digital bank account provides a modern way to manage these small-business finances. It lets you build a barrier between your business and your personal funds. In addition, opening a business bank account can lead to other significant benefits, allowing you to drive growth and to prepare for a prosperous future.

Who Should Get a Digital Business Bank Account?

Generally speaking, businesses are considered "small" when they employ fewer than 500 people. However, a payroll of several hundred workers represents a massive operation compared to most actual small businesses. In fact, a vast majority of small businesses don't have any employees at all.

According to the federal government's Small Business Administration, 31.7 million small businesses operate in the U.S. Of these, 25.7 million are so-called "sole proprietorships," single-person operations with no employees. That amounts to 81% of all small businesses out there.

What does that mean for you? Well, given the structure of the gig economy, you can operate a small business without even noticing it. Anyone who earns a portion of their income through freelancing or contract work technically runs their own startup.

If that applies to you, why not recognize the fact and squeeze as much value as you can out of the situation?

6 Benefits of Opening a Business Bank Account

Clearly, tens of millions of Americans could benefit from upgrading the financial structure of their small business. Still, a surprising portion of them don't take those steps. One study suggested that nearly a third of small business operators (32%) aren't properly differentiating their business and personal accounts.

Running a modern small business – even one that has you as the only employee – benefits from a forward-looking financial structure. A business bank account is one way to make that possible. Here are four major advantages you receive establishing a digital small business bank account:

1. Separate Your Personal Finances

Mixing your business and personal funds can lead to long-term headaches. By setting up a business bank account, you can create a barrier between the two. This division gives you increased peace of mind and a better handle on your startup’s finances.

2. Easier to Track Spending and Revenue

Giant multi-national conglomerates mine data to improve their bottom lines. You can do the same with your (admittedly much smaller) operations. With a business bank account and debit card, you can easily track revenue and spending. This gives you the insight you need to make intelligent decisions.

3. Simplify Tax Preparation

The improved data collection has many potential applications. None of these is more important than the upgrade it gives you at tax time. Suddenly, all the information you require to prepare taxes is right in front of you.

4. Opens New Financial Horizons

You want to expand your business over time. A business bank account represents the first step in that direction. Once you have one in place, you can look ahead to other financial improvements. For example, a business bank account will give you an edge if you apply for things like loans or lines of credit.

5. Maximizes Your Flexibility

As a small business, one of your key competitive advantages comes from your flexibility. You don't have the same resources as your bigger rivals. But you are quicker and nimbler, giving you the ability to jump on sudden market changes.

A digital business bank account suits that adaptability. Large, traditional banks have rigid products that force you to adjust your approach to fit their offerings. The right digital bank account will give you the maneuverability you need.

6. Forward-Looking Technology

Technology drives the modern economy. A business bank account helps plug into that high-speed ecosystem. Any traditional bank will give you plenty of online options. However, they aren't designed specifically for commerce directed for the internet age. A digital bank account gives you that targeted power.

Digital Business Bank Accounts Help Optimize Your Small Business or Startup

Whether you work alone as a freelancer or oversee hundreds of employees, you are looking to manage your finances as efficiently as possible. A digital business bank account will put you on the right financial footing for success.

A digital business bank account will put you on the right financial footing for success.

You'll be able to separate your business funds from your personal finances. At the same time, you’ll improve your situation at tax time and open the door to future expansion. A business bank account provides an excellent starting point as you look to create the right financial structure to develop your startup.