A business partnership can be a highly beneficial arrangement. Partners can share responsibilities, obligations and pool resources.
Many business partners opt to open a shared bank account, accordingly, which may result in numerous benefits. However, there are also potential drawbacks to consider. Should your business have a joint bank account?
Consolidating capital
One of the key advantages of having a shared bank account with your business partner is that you can consolidate finances. This can make it easier to pay clients, employees and bills in a timely manner and you’ll also have better access to the overall financial state of the company.
Transparency
Business partnerships are founded on trust. The more transparent business partners are with spending, the more trust increases. It’s important for each partner to know that the other is spending sensibly and has the best interests of the company in mind. The transparency of a joint bank account shows a serious commitment from each business partner.
High efficiency
A joint account can also be highly beneficial when one business partner is not around. For example, a partner may fall ill. Bills and other financial obligations will still need to be paid in this scenario, and the other partner can take care of it all with ease through a joint account. Separate accounts may make it difficult for a partner to gain access to funds in emergency scenarios.
Unfortunately, all of the above factors also have the potential to be disadvantages. A joint account can leave both partners exposed legally. A joint account also means that one partner cannot, in theory, stop the other from spending too many funds. The account can also be tricky to divide should the business relationship come to an end.
If your business partnership is built on strong foundations, then a joint account can be advantageous. Yet, as you explore your options, it will be beneficial to have legal guidance so that you can better assess and address your risks either way. We help business owners with a host of legal issues; contact us today for a consultation.