Freelancing

5 Best Bank Accounts For Freelancers In 2021 – Nav

Summary

Freelancers juggle invoicing, deadlines, client demands, cash flow and more. With that much on your plate, you want to simplify as much of your work as possible. And one way to do that is with a business bank account. The right bank account can help you manage your business finances more smoothly and efficiently, and provide valuable insights into the health of your freelance business. 

Why freelancers need separate accounts

There are several important reasons…….

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Freelancers juggle invoicing, deadlines, client demands, cash flow and more. With that much on your plate, you want to simplify as much of your work as possible. And one way to do that is with a business bank account. The right bank account can help you manage your business finances more smoothly and efficiently, and provide valuable insights into the health of your freelance business. 

Why freelancers need separate accounts

There are several important reasons why freelancers need separate accounts:

  1. Taxes. As a freelancer, you must report your income and expenses to the IRS and typically you must also pay taxes (including self-employment taxes) to the IRS. As the IRS explains: “The federal income tax is a pay-as-you-go tax. You must pay the tax as you earn or receive income during the year.” There may be penalties if you fail to do so on time. By using a separate account you can keep track of your earnings and expenses and it should be easier to budget for those payments. It can make bookkeeping easier.
  2. Professionalism. When you’re invoicing clients, it will be more professional to ask them to make payments to your business (in a business name) than to you personally. You’ll want an account with the name of the business to deposit or receive payments. 
  3. Financing. Cash flow is often a challenge for freelancers. Clients may slowly, pay late or— worst case scenario— not at all. That means you may need to find short-term financing in the form of small business loans to smooth out cash flow. Many lenders will require business bank account statements before they will provide business financing. You’ll be ready for that request. 

What type of bank account do freelancers need?

Most freelancers will want to start with a business checking account and a business debit card. As your business grows, you may want to add a business savings account. Also consider getting a business credit card as it can help smooth out cash flow and offer valuable perks like cash back or travel rewards.

The account you choose doesn’t necessarily have to come from the bank or credit union where you hold your personal checking and savings accounts. Unless you expect to make regular cash deposits, you may not even need a business bank account located nearby. In addition to traditional financial institutions, there are many online banks and financial institutions that offer online business bank accounts to small business owners, including freelancers. These often offer robust mobile banking and mobile deposit features so you can use your account from anywhere you’re working.

We’ll share more tips on how to choose the right bank account in a moment. 

Best bank accounts for freelancers

Ultimately the best business bank account for a freelancer is one you use! As you shop for one, here are …….

Source: https://www.nav.com/blog/best-bank-accounts-for-freelancers-1075240/