You might be wondering if you can do business using your personal bank account as an entrepreneur or small business owner. The short answer is that you can, but it is not advised, to use your personal bank account for business purposes. Confusion, legal challenges, and tax complications can result from combining personal and corporate finances.
Even if you are a solo entrepreneur or independent contractor, it is always advisable to open a separate bank account for your business. This will make it simpler for you to maintain your personal and corporate accounts separate and keep tabs on your earnings and expenses. Additionally, opening a separate bank account for your company will help you build business credit, which is beneficial if you want to later apply for loans or credit cards.
You may have heard the terms “trade name” and “LLC” when it comes to registering your business. A trade name is a name used by a business that is different from its legal name. It is often referred to as a DBA (short for “doing business as”). If, for instance, John Smith is your legal name and you wish to run your company under the name “Smith’s Marketing Services,” you would need to register a trade name.
In contrast, an LLC is a separate legal entity from its owners. It offers liability protection, which means that the owners are not held legally liable for the debts and liabilities of the business. An LLC may also use a trading name, although the name that appears on the formation documents is the legal name.
A trade name is a way to let people know what name a company operates under. It does not offer any benefits or protection under the law, such as immunity from liability or tax advantages. However, registering a trade name might aid in brand development and professional image establishment.
In conclusion, it is conceivable but not advised to use your personal bank account for commercial purposes. To minimize confusion and legal concerns, it is best to open a separate bank account for your business. Additionally, registering a trade name might aid in the development of your brand but offers no legal protection or advantages. Consider creating an LLC if you want to benefit from liability protection while also protecting your personal assets. Last but not least, a DBA, which is utilized in the United States, is not the same as an ABN (Australian Business Number). An 11-digit number known as an ABN uniquely identifies a company in Australia and is used for tax and other business-related purposes.
Your trading name and your business name can indeed be different. However, it is crucial to make sure that you file your trading name registration with the proper authorities and adhere to any applicable laws in your country. You might also need to think about how choosing a different trading name might influence your branding and marketing initiatives.
Doing Business As (DBA) is not a recognized legal name. It is merely a means via which a sole proprietorship may conduct business under a different name. Consequently, a DBA is typically connected to a solo proprietorship. So, in response to your inquiry, a DBA can be regarded as a type of sole proprietorship.