American fintech company Brex It goes without saying that as a business owner it is “important to have your finances under control”.
Brex writes in a blog post that the good news is that with involvement, entrepreneurs can easily take advantage of various financial options that they may not have previously had access to. The Brex team adds that transitioning from a sole proprietorship to an LCC, S-Corp or other type of business unit “can be a sign that you are moving in the right direction”.
Brex provides useful tips for business owners who are in control of their short term and long term financial wellbeing and plan to do so.
“One of the perks of incorporation is that it is much easier to separate your personal and business expenses … because registered companies have access to a wide variety of commercial or FDIC insured ‘banking alternatives’ cash accounts to place and place on can send and track their money. ”
Although business cash accounts are offered to sole proprietorships, sole proprietorships typically have fewer options when choosing the best strategy for achieving their financial goals when compared to registered businesses.
Brex further notes that having a dedicated commercial bank, cash or savings account just for your business expenses “greatly reduces the stress of tax time and the general stress of having less immediate visibility into your company’s cash flow”.
A business account makes it easier to keep track of your specific business transactions. It is also possible to more precisely manage your business cash flow (which can lead to greater profitability). Other benefits of these accounts include the ability to clean up your bookkeeping in the event of an audit, the ability to apply for larger business loans, and make your company “more attractive” to lenders and investors, according to Brex.
The fintech company advises that if you ever need to apply for alternative financing like a business loan or an SBA loan, lenders will do a due diligence to check that you have good bookkeeping. As explained by Brex, part of it means “keeping your personal and business finances separate”. Without this segregation, it is much more difficult for lenders to determine whether your business is “legitimate and low risk,” and so are investors, according to Brex.
Fintech company adds:
“Across the board, business owners who do not separate their business and personal expenses are generally seen as riskier borrowers and may struggle to get approved for low-interest loans.”
Brex further notes that coordinating funding can be very time consuming and can become a problem towards the end of the month when we may have many other things to do.
“Automating your corporate accounting is one of the best things you can do for your business and for yourself. … The automated cost management improves the productivity of the company, … it streamlines the daily processes, offers a better financial overview, improves the reimbursement of costs and strengthens the compliance of the employees. “
Brex has established itself with established accounting software services such as Quickbooks, Netsuite, and Xero to “seamlessly integrate your favorite tools”.
The fintech company also mentioned that it is providing receipt capture technology that allows users to easily upload their photo or screenshot of their receipt to the Brex app and their purchase “is automatically linked to their transaction”. Transactions are now “conveniently available and can be consolidated and archived at the end of the year”.
Brex advises that having the ability to have your business spend at your fingertips “can help expedite loan inquiries, investor inquiries, financial transactions and big purchases for your growing business”. All of this can save business owners “the valuable time they need to focus on building and scaling their business,” explains Brex.
(Note: For more information on effective corporate governance strategies using the latest fintech solutions, click here.)