Business Banking: Opening a Business Bank Account

Questions and Answers

To cover unexpected expenses and maintain business operations

Break-even point = Fixed cost ÷ Contribution margin

The difference between total sales revenue and cost to make a product

456 units Signup and view all the answers

To identify the point at which the business makes a profit Signup and view all the answers

Business name and business tax identification number (EIN) Signup and view all the answers

To keep business and personal finances separate Signup and view all the answers

Inventory management Signup and view all the answers

To determine the break-even point Signup and view all the answers

Bank reconciliation Signup and view all the answers

To have too much money than too little Signup and view all the answers

To pay suppliers or invoice customers Signup and view all the answers

To analyze business performance and make informed decisions Signup and view all the answers

Study Notes

Keep personal and business finances separate to maintain clarity and organization
To open a business bank account, you'll need to provide your business name and business tax identification number (EIN)
A business bank account is used for business transactions, such as paying suppliers or invoicing customers
A separate business bank account is often required to issue a business loan or line of credit

Accounting software should have inventory management, ledger and journal entries, and financial statement generation capabilities
Features of accounting software include check writing, managing receivables and payables, tracking income and expenses, generating invoices, and calculating taxes
Bookkeeping services can be accessed online and offer features like bank reconciliation and invoicing

To determine startup costs, make a list of physical supplies, professional services, licenses, permits, office space, and payroll and benefits (if applicable)
Overestimate startup costs to ensure sufficient funding
Aim to have enough cash to cover six months of operating expenses
Break-even point = Fixed cost ÷ Contribution margin
Contribution margin = Total sales revenue – Cost to make product