Saving money is just as important for businesses as it is individuals. And while small businesses may not be able to actively fund a savings account, it’s important to practice good money management.
Some banks offer high-interest savings accounts for businesses that allow you to earn a little extra money on your savings. So having a business saving account can improve your financial situation even if you are unable to make regular payments.
It is important for any business to have savings. Savings provide businesses with financial security and emergency funds to cover unexpected bills and costs. Without savings to act as a financial buffer during life’s uncertain moments, many businesses would be forced to close.
To ensure the success of your business, this blog will mention three benefits of a business savings account.
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But first, what is the point of a business savings account?
Opening a business savings account will not only allow you to safely store your finances but it will also allow you to grow your finances too, even if you are only able to deposit small amounts on a regular basis.
A business savings account also pays you interest on your savings and allows you to save on a long term basis for a vast range of different reasons.
Are business savings accounts worth it?
A lot of businesses looking to grow their money use a business savings account in order to benefit from the interest that they generate. So yes, they are worth it!
And one of the main benefits of a business savings account is that you don’t need to keep money locked away for an extended period of time, you can access it at any point too!
What are the benefits of a business savings account?
Save for major purchases
If your business can save money for new major purchases, such as new equipment or machinery, paying with cash is fast and straightforward. With no monthly payments or loan repayments, you can relax knowing that you are the owner of your assets. This way, you also can save money by saving on interest and protecting your business against inflation.
Expand and grow
Saving money helps ensure your business remains profitable and has the necessary resources to expand and grow. By placing spare cash in a business saving account, you grow your money by earning a competitive interest on the balance. A business savings account also helps to maintain financial stability. Knowing that you have available funds in an emergency, you can utilise cash flow to focus on expansion and growth.
Provide financial cushioning
High and low seasons may mean you see financial fluctuations throughout the year. With the safety and security of business saving account, you can rest assured that you have the available funds to meet monthly expenses. Even if your business experiences little downtime, a savings account allows you to plan for the unexpected.
Do I pay tax on business savings?
A lot of businesses do not realise that all interest earned on business savings accounts is paid gross. This means any interest received will need to be accounted for in order for it to be taxed correctly.
What are the risks of not opening a business savings account?
- Unintentionally merging your business and personal finance – it’s important that your business finances are in a designated business bank account
- Without an emergency fund, your business will be vulnerable and less prepared for unforeseen events
- Being denied business loans and credit. This is because having bank statements from a business savings accounts gives your lenders more confidence that you can pay off your debts
- Missing out on the opportunity to grow your extra business money
Why choose React Accountancy?
Here at React Accountancy, we provide trusted accountancy services to start-up, established and multi-national businesses across a diverse range of industries.
From the moment you get in touch, our approachable, friendly and professional team will go above and beyond to ensure that you receive the right advice, support and accountancy solutions for your business. That’s a promise.
All of our team has years of experience in providing accountancy services that support your business including complex financial issues.
Get in touch today for further information about any of our services.
You can reach us on 01914324110 or contact us via email using info@reactaccountancy.co.uk
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https://reactaccountancy.co.uk/top-3-challenges-every-small-business-owner-faces/
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