Business checking account vs. personal checking account: the difference

Business checking account vs. personal checking account: the difference

The type of account you select can really make or break your banking experience. That is why knowing what you get into when applying for an account is a must. 

For instance, are you sure the business checking account you are considering getting is on par with your company’s requirements? Maybe this Genome article will help you figure it out! Join us as our team explains the difference between business checking vs. personal checking accounts. 

Business checking account: a definition

If you have ever searched for a business account, you probably came across entire lists of different account types. For instance, some payment providers offer investment accounts, others have savings accounts, and so on. 

So, where does a business checking account fall on this scale? Well, we can characterize it as a starting point for the financial life of your company. Business checking accounts typically provide the basics of financial services and features that a company requires. For instance, a business checking account allows a business to store and transfer its funds, make money withdrawals, generate balance and account statements, issue debit and credit cards, etc. They are very similar to your standard personal current accounts but are used by businesses. 

Of course, the way such accounts operate can differ on a bank-to-bank basis. Some providers offer small business bank accounts, while others only work with enterprises.

Also, if you are looking for a business checking account for an LLC, check this Genome article to find out how to select the right one. 

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Comparing business vs. personal checking accounts

To better understand the differences between business vs. personal checking accounts, let’s compare their purpose and features, along with other metrics.

Points of comparisonPersonal checking accountBusiness checking account
ClienteleIndividuals.Companies, mainly small and middle-size businesses.
Services offeredBasic services for everyday banking.Basic services for everyday banking, but might also have additional features that target companies specifically.
Merchant account availabilityOwners of personal current accounts can’t have merchant accounts.Owners of business checking accounts can apply for a merchant account at their bank or another financial institution that offers such a service.
Onboarding requirementsUsually, an individual needs to provide basic information that verifies their identity.More documents are required: the business owner needs to verify their identity and the legitimacy of a business.
Beneficiaries of money transfersThe beneficiaries are mainly family and friends; money transfers are made for personal reasons.The beneficiaries are mainly business partners, contractors, and employees; money transfers are made for business purposes.
Credit/debit cards availabilityIndividuals can usually order debit or credit cards for their personal expenses.Companies can order debit or credit cards for their business needs. Some banks also allow issuing additional cards for employees – either to receive income or to use for corporate expenses.
FeesThe general fees for using a personal current account, in most cases, are lower than for business checking accounts.The fees for using this account are higher. Also, other features, such as money transfers, can cost more for companies.

As you can see, similar aspects arise when comparing business checking accounts vs. personal checking accounts. But the main differences stem from the fact that the accounts simply cater to different clientele. 

Also, business checking accounts will likely have more security tools to protect the company’s funds and data. Another difference is that companies can usually store and transfer more considerable sums of money than personal account owners. Thus, you are unlikely to find a free business checking account. 

Business bank account vs. personal one: why separate them?

There are many reasons to separate your personal and corporate funds by having both personal and business checking accounts. Here are some of them:

  1. It gives a business owner a better understanding of what’s going on inside their business checking account. They can easier track the transaction flow, transfers, and other company-related financial operations;
  2. Taxes are imminent, so why not simplify the tedious process of filing them? A business checking account will help you keep all your business-related transactions in one place, which will allow for a more straightforward tax filing experience. 
  3. Business accounts grant you access to more relevant services. For instance, using a business checking account, you can make payouts to your employees, batch transfers to contractors, and start merchant accounts to accept payments from customers. 
  4. Your company will look more credible if you keep personal and business funds separate;
  5. Avoid troubles with your bank. Not all financial institutions allow companies to use personal accounts to run their company. Some may even fine or close a company’s account if they find out about funds being mixed.
  6. Last but not least, if, for some reason, your company gets mixed up in a legal case, the separation of personal and business funds will ensure that the former won’t be affected.

Do you want to start a business checking account online? 

If you are looking for a business checking account online, you can check out Genome. We are an Electronic Money Institution licensed and supervised by the Bank of Lithuania. 

With us, you can start a business wallet online and use it for your day-to-day business operations. Inside a wallet, you can have multi-currency accounts in euros, British pounds, and US dollars. 

Your wallet and all the outgoing transfers you make will be duly protected with two-factor authentication. And you can order Genome’s security token to take the safety of your funds and data even further. 

Money transfers, including batch transfers, are available. You can order virtual and physical corporate Visa debit cards for online, contactless, and in-store purchases.

We also provide the access management feature that allows the company’s employees to access the business wallet and help run it securely. 

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FAQ

What is a business checking account?

It is a type of bank account that financial institutions provide for companies. Business checking accounts are suitable for businesses that use financial features and services daily: transfer money, make purchases, withdraw cash, make payouts, etc. 

Do I need a business checking account?

Yes, you require a business checking account if you own a company and need access to banking services and operations. A business checking account is a basic account for a company, but there are also other types of business accounts, read more about them here.

Can I use a personal checking account for business?

You better not use your personal account for your company’s expenses. First of all, you don’t want to have negative consequences for your legal liability. And also, most banks don’t allow it. We described why you shouldn’t mix personal and business funds above. As our team explained while comparing business vs. personal checking accounts, you can start two separate accounts. 

Why do you need a business checking account?

Any company that performs even basic financial operations and/or accepts payments from customers needs this type of account. 

Why is a business account better than a personal account?

You can’t say that any of these accounts is better than the other, as they simply differ. Personal accounts cater to individuals, while businesses use business ones. We described more differences in the business checking vs. personal checking accounts section.

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