Choosing a business bank account for your small business is one of the most important decisions you’ll make. A dedicated business bank account can be a powerful enabler, giving you control over your finances, empowering you with the insights you need to grow your business and demonstrates your business’s financial position.
Why It’s Important to Have a Business Bank Account in South Africa
Strong financial management is key to business success and profitability for a small business in South Africa. It’s not ideal to use a personal bank account for business banking, as it can become challenging to plan for the future, and manage and forecast business cash flow.
Trevor Gosling, CEO and co-founder of Lula, says, “Clients, vendors and business funders are often sceptical about SMEs. Having a dedicated business account can help legitimise your business, giving you an advantage when it comes to dealing with being paid by customers and applying for funding.”
To achieve financial stability, you’ll want to have a bank account exclusively for your business, specifically tailored to the unique needs of your business.
The success or failure of your business is heavily dependent on cash flow management. Having an exclusive bank account, with functionality that helps you track and manage your cash flow, can help you stay focused on growth.
5 Reasons Every Business Needs a Dedicated Business Bank Account
Having a dedicated business bank account can help you gain total control over your cash flow throughout the year, allowing you to easily view statements, especially during tax season, when you need to calculate tax-deductible expenses.
The way you manage your business’s finances also contributes to your creditworthiness and eligibility for financing.
“Business bank accounts, unlike personal bank accounts, come with features and benefits that are specifically designed for businesses, and offer pricing options that support the high-transaction nature of a business,” says Trevor.
Here are five reasons it’s important to have a small business bank account in South Africa:
1. It’s easier to track financial performance
Having a dedicated business bank account makes it easier to keep track of your business’s income and expenses.
With all your finances in one place, you can quickly generate financial statements and assess the financial performance of your business. This clarity gives you the power to make more informed decisions, adjust your budget, and identify trends that enable accurate cash flow forecasting. Accurate financial tracking means more effective cash flow management.
2. It allows you to view cash flow holistically for better forecasting
Without proper cash flow management, even a profitable business can face financial troubles.
To ensure a healthy cash flow, it’s crucial to regularly monitor incoming and outgoing cash and stay on top of key financial indicators by forecasting cash flow. Having a dedicated business account gives you a clear view of your finances, making it easier to track and manage your cash flow.
3. It lightens the administrative load
The mental load and complexity of managing multiple accounts, without one dedicated to your business, can be taxing and eat away at valuable time that could be used to focus on more important things like your growth strategy.
Banking from a single profile alleviates the administrative load of having to juggle between multiple accounts to make transactions, whether it be payroll or paying a supplier.
4. It makes it easier to access small business funding
If you’re looking to expand and want to secure small business funding, having a dedicated business bank account can help you build a transactional history, and position you favourably for better funding options and funding terms.
As a part of our online funding application process, you’ll need to submit your latest transactional data. Here’s where having a dedicated business bank account, like one of the accounts we offer at Lula, will make the process so much easier for you.
5. It simplifies the tax filing preparation process
Combining business and personal finances can be a recipe for chaos, especially when tax season comes around. Having a dedicated business account gives you a clear and organised view of your finances, streamlining the tax filing process.
Why Using the Right Financial Management Tools is Important
When exploring business banking solutions, keep in mind that a bank account with the right built-in tools can elevate your business. By automating cash flow management processes, you’ll be in a better position to start planning for expansion.
Accounting tools like Xero or QuickBooks Online, along with the cash flow management tool Lulaflow, which allows you to effortlessly track your cash flow from one platform, can position your business for growth. Lulaflow is available in our Free and Unlimited Lula Business accounts.
Meet Bank Accounts Dedicated to Small Business
We understand the financing challenges small business owners in South Africa face and have designed a business banking solution that supports business growth by making it easier to access funding and seamlessly manage cash flow.
With Lula’s Free Business account:
- Earn 1.5% interest per year on your balance.
- Get real help from humans, not robots.
- Access our Multicompany feature.
With our Unlimited business account you get:
- Unlimited free EFTs.
- 5 free business bank cards.
- Dedicated priority support from real humans.
Take control of your business’s cash flow today and open a Free or Unlimited Business account online in minutes. Here’s a stress-free guide to help you through the quick and easy process.
