Having a bank account is an indispensable way of managing your savings and planning for the future. A personal bank account helps monitor your cash flow, purchase goods online using a debit card, and fulfill other financial obligations. If you’re applying for a loan, the creditor may use your personal bank account information to calculate your credit score.
However, there are many limitations on what you can do with a personal bank account. A business or merchant account is a must-have if you’re an entrepreneur planning to grow your business in the current world.
Reasons For A Business Account
Hong Kong is a global investment destination for many entrepreneurs. If you’re an entrepreneur looking to grow your business, having a business account in Hong Kong will open many opportunities for your business.
Here are seven reasons you should have a business account in Hong Kong:
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Gives Your Business A Professional Look
Having a business account in Hong Kong solidifies your reputation as a trusted merchant. Whether you own an actual physical store or are a freelancer working from home, you’ll gain trust if you open bank account in Hong Kong.
Business partners won’t take you seriously if you give out a personal bank account. In Hong Kong, people respect and value legitimacy. People prefer making payments to a business bank account bearing your business’s name.
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Helps You Understand Cash Flow
Understanding your company’s cash flow will help your business grow faster. A business account is treated differently from a personal account. You can connect your Hong Kong business account to accounting software that enables you to track your cash flow. These tools automatically calculate your credit history and send reports to the banking system with credit scores. A business account may help you access financial resources that a personal account wouldn’t.
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Makes Filing Taxes Easy
Hong Kong is known for being a straightforward tax regime. A business account will make filing your taxes easier if you’re a foreigner with a company incorporated in Hong Kong. You’ll easily connect your company account to an accounting application that tallies your expenses and profits on a balance sheet. The accounting app may even file the taxes on your behalf!
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Keeps Your Business Separate
Mixing your private and business funds isn’t advisable because:
- Filing taxes can be a nightmare, given you must go through hundreds or thousands of transactions to isolate business transactions.
- It’s easy to miss or overlook tax deductions you may be entitled to due to the complex sorting procedure of the intermingling transactions.
- It portrays unprofessionalism.
- It’s challenging to achieve a clear audit trail.
You’re better off if you can separate business and personal finances in your operations. Stay organized by opening a business account different from your personal bank account.
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Limits Your Personal Liability
A limited liability status protects you from your company’s debt obligations. In Hong Kong, owning a limited liability company gives you immunity from unforeseen damage resulting from your company’s operations. However, if you lack a business account for your company, your personal assets may be affected when settling debts.
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Builds Your Credit Score
If you have a credit pool, nothing can prevent you from growing your business. Sometimes, a positive cash flow may not be enough to expand your business strategically, which is why you need a business account. It’ll help foster a positive working relationship and a good credit history with your bank.
Regular transactions with a business account will give your company a positive history rating, which improves your credit score. You may be pressed into corners where only an asset financing loan will bail you out, for which you’ll need a high credit score.
Leveraging a positive banking relationship with a bank in Hong Kong can help you qualify for business loans or credit cards you wouldn’t have with a personal account.
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Prevent Auditing
There’s comfort in knowing you’ll never be subjected to unnecessary auditing. A business account guarantees peace of mind. It’s not uncommon for the Inland Revenue Department (IRD) in Hong Kong to subject business owners to audits when they underreport their revenues.
Having a business account will help you to handle your legal obligations transparently. You may hire an accountant to manage the business account on your behalf.
Conclusion
A business account is essential for entrepreneurs in Hong Kong. It gives you a professional appeal and solidifies your reputation in the corporate world. It’ll help you navigate your legal obligations and limit your personal liability in legal suits. In addition to accelerating your business growth, a business account will help you realize your potential through access to exclusive credit resources. If you’re using a personal account, it’s time to upgrade to a business account and enjoy the benefits.
Interesting Related Article: “What are some reasons to Get a Business Accountant?“