Joint accounts allow two or more people to own a bank account. Typically, joint accounts can be traditional bank accounts by definition, virtual bank accounts or digital bank accounts too. Most people tend to think of couples sharing an account. However, join accounts are useful in business too. If you are starting a small business with a partner, you have plenty of options of how to handle your money. In this post, we’ll show you useful ways to use simple joint accounts for your business.
Link Your Accounts
When going into business, it can be easier to trust partners with linked accounts. Instead of creating a directly joint account, you and your partner can link bank accounts. This allows you to easily transfer funds directly from your bank accounts. Think of this option as one step more convenient than paying with Venmo or Paypal. However, it can be a nice joint account banking solution for businesses just starting out.
A tenant-in-common account is a unique join arrangement. As you and your partner start too contribute more capital into the business, you might want an extra layer of protection. Theses joint accounts require multiple people to sign and approve banking activities. This approval would be required for activities such as withdrawals or transfers. When shared between two people, these accounts allow for added security and transparency. Of course, any new business can benefit from a consensus of money management.
Shared Bank Accounts
A simple shared bank account allows business partners to contribute to one account. Using a simple account, you and your partner can contribute to one pool of money. That money can be used by either person for withdrawals, payments or expenses. Depending on your banking institution, it is easy for each account owner to monitor transactions and banking activities. As a result, business partners can use the funds to get their business of the ground.
Traditional Joint Accounts
A traditional joint account can be used by experienced business partners. Since the account assets can be accessed by anyone with a name on the account, a high level of trust is required. When it comes to a small business revenues from Cash Crate, you want to have an account for deposits. These accounts are more permanent. So, for a small business, partners can use joint account over the course of the business. Both partners contribute and withdraw from the account.
Corporation Bank Accounts
If the business is set up as a corporation, a legal business account will be required. This account must be set up as a separate entity which follows the C or S Corp filing deadline. While this is not an easy process to set up, requiring a corporate resolution to open the account, it might be worth while. This is the most legitimate way to handle company funds. And later on, it can act as a simple joint account with a level of controls required for banking activities. This can all be outlined in the corporation documents and bank account rules.
Of course, you should go into business with a partner that you can trust. In the beginning, it will be a good idea to keep your joint bank accounts as simple as possible. You might want to start with linked accounts. Then, gradually work your way up to a business account for an incorporated business. Be sure to have open discussion with your business partner about the financial needs, budgets and goals of the company.