The short is a business bank account is better for a dropshipping business.
Although you can use either a personal or business bank account for dropshipping, I do recommend using a business bank account for many reasons.
Here are 6 good reasons to use a business account for your dropshipping business.
- Separating business from personal funds; when you separate personal funds from business funds. It helps your business become more accountable. You then understand what money is for your business operations and what money is for your personal needs.
- Taxes; In most countries, the taxes that an individual pays on his income, is different from what a corporation pays. In other words, Company income tax and personal income tax.
Having a business bank account enables dropshippers to separate business funds from personal funds.
This makes tax reporting for your business more organized because you are able to see in one account only that pertains to your business and can better report your taxes for your dropshipping business.
- Accounting; having a business account makes it easy to account for transactions made in your business.
You can more efficiently prepare an account report of the profit, loss, expenditure and gain of the business.
- Investment into the business; if you need to acquire properties or other assets or even reinvest into the business, having a business account makes it easier because you can see what your business is can afford on it own without the addition of your personal funds
- Valuation; having a business account makes valuation your dropshipping business much more efficient.
You can see numbers in your business account and use it to evaluate your business worth. Your business worth is different from your personal worth.
- Tracking and analytics; Having a business account helps you in tracking your business growth.
You can see your account history and track how your business has grown over time. This will help you keep track of your progress.
You can now see why we definitely recommend having a business bank account for your dropshipping store.
To have a business account, you need to have a documented business structure, you can this article to our review of the different business structures and of course what we recommend for dropshippers!