A business bank statement is a record of the transactions you conducted during a given time frame. It usually includes details about your business savings or checking account and covers a month. The statement shows your deposits and withdrawals, as well as any transactions made with the debit card linked to the business account.
Let’s explore what business bank statements mean and how you can use them to improve your business operations.
What Is a Business Bank Statement?
A business bank statement is a detailed record of all financial transactions that take place in your company bank account over a specific period. It shows each transaction separately so you can track your income and spending for that account.
Each bank statement shows your account activity for a specific period, often one month. It is generated by your financial institution at the end of every statement period and issued to you. The hard copy is sent through postal mail, and the electronic copy can be accessed through either your email or your web portal.
In case you have more than one bank account, you should be getting separate statements for each account that contain all the transactions made in each of them. You might have a corporate check account, a payroll check account, and a personal checking account.
What Details Are Covered in a Business Bank Statement?
Here are some details you might see when you open your business bank account statement:
- Bank Information: This section contains the financial institution’s name, address, and contact information (phone number and website). Bank details are located at the top of the statement.
- Business Information: This includes information about your company name, address, and phone number.
- Account Information: This section details the account type you opened with the bank, along with the name and number of the business account.
- Statement Period: This will provide you with the precise date range of the bank statement.
- Account Summary: This section shows the beginning and ending balance of your account as well as the total amount of withdrawals (debits) and deposits (credits) for a specific statement period. Usually, the account information appears first on a bank statement, followed by the account summary.
- Transaction Summary: Every transaction that you made within the statement period is listed here. It takes up most of the space in a bank statement. The date, transaction description, reference codes, transaction amount, and balance after the transaction are all listed in chronological order. The type of transaction you made can often be found in the transaction description field.
- Bank Messages: You can find that some banks include banking news and announcements of important alerts.
What Are the Different Types of Business Bank Statements?
There are two ways you can view the bank statements for your company accounts. Every month, financial institutions provide an electronic or physical statement:
1. Paper Bank Statements
The address listed on your bank record is where paper bank statements are sent. Certain users prefer a tangible copy of a printed statement; however, this service has an associated fee that varies depending on the bank. There are instances when switching to electronic statements will save you money on a monthly service charge.
2. Electronic Bank Statements
You can view your electronic bank statements (also known as e-statements) online by entering your username and password. If you require a hard copy of your electronic business bank statement, you can download and print it. Enrolling in e-statements might result in some banks waiving your monthly service fees, which helps make them free.
How to Utilize Your Business Bank Statement?
Bank statements are incredibly useful resources for your company. These paper or digital statements can help you stay precise and organized in many ways.
Here are seven applications for your bank statement for your business:
1. Completing Your Tax Returns
You must gather documentation to ensure accuracy while filing your employer’s tax returns or business tax returns. Your bank statements are part of this.
Your bank statements can be used as a backup document when filing business taxes. Make sure you are reporting your taxes appropriately by referring to your statements. The bank statements serve as evidence that your tax returns are accurate in the event of an audit.
2. Applying for a Loan
Lenders require documentation of your company’s revenue streams. As a result, when you apply for a business loan, the lender may need you to present your bank statements. The statements are examined by the lender to see if you qualify for a loan.
There is no guarantee that a Paycheck Protection Program (PPP) loan you obtained will be forgiven. If you wish to have your debt forgiven, you must apply. Statements from your bank accounts may be required when submitting an application for PPP forgiveness.
3. Reconciling Bank Statements
Your bank statement can be used to verify the accuracy of your accounting records. The term “bank statement reconciliation” refers to this procedure.
In order to identify and correct discrepancies, you reconcile your bank statements with your accounting records.
4. Monitoring Uncashed Checks
Do you make payments with checks on a regular basis? If so, you are aware of the potential for overspending and forgetting about them when vendors take a long time to cash them.
A business bank statement might be used to monitor checks that haven’t been cashed. You can see on your statement if the recipients cashed the checks or if you still need to pay them. You could examine this by contrasting your check register with your bank statement.
5. Budgeting for Your Business
Upon reviewing your bank statements, some spending patterns may become apparent. You may find that you are spending a lot of money in specific places. Alternatively, you might find an underused, reliable source of income.
Utilize the information on your bank records to expedite the process of developing your company business budget. Based on your previous transactions, you can project your future transactions.
6. Identifying Errors and Unauthorized Transactions
Concerned about mistakes in transactions? What if hackers used your account to make purchases? You can identify mistakes and unlawful transactions by looking over your business bank statements.
Reporting errors may be discovered, or you may discover that your account information has been stolen. You can promptly notify your bank of any irregularities by checking for them on a regular basis.
7. Tracking Finances
As a small company owner, you must constantly keep an eye on your company’s finances, particularly the amount of money coming in and leaving out. You can monitor the payments that your clients and company make by looking through business bank statements.
Importance of Business Bank Statement Understanding
Having a business bank statement can help you in many ways, such as tracking finances, creating a business budget for your business, identifying errors and unauthorized transactions, and applying for a loan to grow your business over time. I hope this article has provided you with a detailed understanding of business bank statements and how you can utilize their potential to maximize your business operations.
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