Do you want your money to multiply while you sleep? Are you tired of breaking even but not producing any profits? Then it’s time you open a business savings account.
A business savings account is a type of bank account that adds an interest amount to your deposited money. The interest percentage differs from bank to bank. However, the key benefit here is that your money keeps growing.
But that’s not all. Having a business savings account has a lot of other benefits. Let’s discuss each one in detail below!
4 Benefits Of Setting Up A Business Savings Account
1. Builds A Financial Backup
The primary goal of starting a small business is to generate enough funds to meet business expenses. This creates a hand-to-mouth condition where every dollar you make is spent on an expense.
While this works well during the good times, a business should always stay prepared for economic recessions, demand changes, accidents, and other financial emergencies.
And a business savings account helps you do just that. It encourages you to save and avoid overspending. It also ensures you have some financial backup during the rainy season. You can learn more from Westpac.
2. Offers Capital For Small Investments
Investments don’t only mean purchasing new shops and warehouses. As a business owner, everything you buy for the business is an investment. This includes machines, furniture, and even the TV in your office.
It is possible to continue making future investments with enough capital. Of course, you can always apply for bank loans or support programs. But that’s a long shot that results in repayments with interest.
So why not eliminate this dependency by having your own savings account? You won’t have to wait for approval or pay interest.
3. Makes Up Your Retirement Funds
Preparing for retirement is an important goal in every business owner’s life. Yes, you have a business that may earn you profits in the future. But how long are you going to depend on this hope?
Research shows that 20% of businesses fail in the first two years of operation, 45% fail in the first five years, and 65% fail in the first ten years. You need to survive at least 15 years in business to be able to expect a financially-safe old age.
Since stats don’t support the notion of business success for everyone, we highly recommend getting a savings account. Even if your business fails or does not generate enough profits for you to live a happy retirement life, a savings account will serve as a reasonable backup.
4. Offers Peace Of Mind
With all of the above benefits combined, it would not be wrong to claim that a business savings account brings peace to your life. Financial security relieves you from the stress of losing everything.
Even if your business doesn’t work out, the money from the savings account will help you survive and start a new business. It will also help you pay any debts, taxes, or unexpected payments that may come up suddenly.
Are There Any Disadvantages Of A Business Savings Account?
When you deposit an amount in a business savings account, you are not losing access to the money. It becomes a liquid asset that you can withdraw anytime. So, there are no disadvantages to saving money through this method.
On the other hand, if you had bought a property or invested in a small company to save, you could have faced problems.
It’s because illiquid assets can’t be converted into cash quickly. They may grow your money more than a business savings account, but accessing your savings quickly through illiquid assets is not easy.
For small to medium-scale businesses, this is a risk that can force them into debt despite having substantial savings.
A business savings account is an excellent way to get yourself out of the stressful hand-to-mouth business condition. It gives you financial backup, capital for investment, retirement funds, and peace of mind.
Small business owners should consider this gateway to growth and expansion. Do you agree? Let us know in the comments below!
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