In the world of finance, banking and money, there are a lot of things that may not make sense to you. Different terms, accounts, and even processes may sound like a convoluted mess that wouldn’t have any helpful things to give you. Although you could do away with a simple buy and sell, knowing more about these things gives you an advantage in the modern-day world. Taking the most out of a Chase business account instead of merely opening some random one would be a wise choice for one. Knowing the promotions and deals that come with your credit card puts you at an advantage that most people wouldn’t even be aware of. Hence, it’s important to learn about these different financial activities and processes.
Let’s specify things a little bit. For this paper, we’ll talk about the two different types of bank accounts: personal bank accounts and business bank accounts.
These two are different types of financial accounts that have their own specific purposes and unique features. Everyone, such as an individual or an organization, would benefit from knowing the differences between the two types of accounts. They’d benefit from having the proper practical knowledge and managerial skills to sift through and organize their finances. That way, they’d be able to easily hit their financial goals.
A personal account is a financial account that is opened and used for exactly what the name implies: personal use. They are mostly used in your day-to-day expenses and trips, such as grocery shopping, paying rent, mortgage, paying for electricity and water, and even utility bills such as your wifi and internet. There are a lot of forms that a personal account may take. For one, there are checking accounts. These types of accounts have easier access to your money but have high-interest rates when you pay it back.
Savings accounts take the form of long-term fund storage, so you’d be able to buy bigger things in the future. Lastly, credit cards are also considered personal accounts. You can use them to pay for different things in malls, business establishments, and other things with the convenience of tapping to pay and/or simply inserting your card to a machine. Usually, personal accounts are opened and named by the individual that’s using them, and it’s the user that’s entirely responsible for using, maintaining, and managing the account.
Now that we have a rough idea of what a personal account is, let’s talk about business accounts. Business accounts are financial accounts that are opened and used for a business or company that has the purpose of doing business transactions. They could also come in the form of checking accounts, saving accounts, and even credit cards. They have, however, opened in the name of business, and there could be multiple people using the account. Whoever is using the account is using it in the name of the business company that has opened the account under.
What are the differences?
Firstly, their purpose varies from what was discussed; personal accounts should be used for personal expenses and not for business ventures. The opposite runs true, as business accounts are being used to conduct business activities, generate income, and the like. Because of this, business accounts have some features that a personal account doesn’t have.
Again, the opposite runs true with this. Some of the areas where business and personal accounts vary are tax implications, level of liability, and even the amount of loans that one could get out of an account. Tax implications are different because a business establishment has different things to pay to the government, such as sales tax. A personal account doesn’t have that caveat. The way debts work is also different between the two. When you have debts with a personal account, then it’s named after you. A business account with debts would not be named to the person who opened the account but to the business company itself. This means that when a company incurs debt through a business account, it’s its name that will have a lower credit score.