Business vs. personal checking: What’s the difference?

Would you choose to wear a wool suit to a pool party? Or a pair of cut-off shorts and a tank top to a black-tie wedding? Probably not, and for good reason. What’s considered appropriate in one setting isn’t necessarily appropriate everywhere else.

The same logic applies to checking accounts. Business accounts serve a different purpose than personal ones, and many entrepreneurs find it helpful to maintain both. Read on to find out why.

Similarities and differences

For the most part, business and personal checking accounts are pretty similar. Both types of accounts often come with a debit card, access to Automated Clearing House (ACH) transfers (an electronic system that allows your bank to quickly move money from one account to another) and digital platforms that you can use to monitor your transactions. And both account types are backed by the Federal Deposit Insurance Corporation (FDIC) for the same $250,000 limit, which generally means that you could be reimbursed for up to that amount if the bank where you opened the account fails.

There are, however, some general differences.

Business

• Higher limits: Business checking accounts typically have larger deposit limits to accommodate entrepreneurs who need to cover big-ticket items, like payroll expenses or office upgrades.
• Extra features: The checks issued in association with business accounts often come with more advanced features — like watermarks, thermochromic ink, bleed-through numbering or holograms.
• Professional formatting: Business checks are often physically larger than personal checks and likely come in a ledger. You can also opt to print them yourself on a check printer.  

Personal

• Lower limits: Because these checks are used mainly for personal expenses, like utilities and home maintenance, they come with lower limits and less robust security features.
• Extra portability: Personal checks are often smaller than business checks and come in a booklet that fits neatly in a wallet or purse. 

Keeping it separate

For several reasons, it’s a good idea to keep your personal and professional expenses separate, including:

• Bookkeeping: It’s easier to manage your bookkeeping when you don’t have to manually separate your personal and professional expenses. By maintaining separate accounts, you can always see exactly how much money your business is bringing in and how much you are spending on it.
• Filing taxes: Taking care of your taxes is more straightforward when you keep your accounts separate. And if you’re audited, you won’t have to worry about proving to your auditor which expenses were made for personal reasons and which were made for business purposes
• Applying for loans: If you ever decide to apply for a business loan, your lender will ask to see business statements to evaluate your cash flow. Having a separate business account will make it easier for you to provide this information, and easier for your lender to quickly vet your qualifications.

As an added bonus, some business checking accounts, like Chase business checking, come with integrated credit card processing capabilities.

Business vs. personal checking FAQs

Do business checks look different from personal checks?

Not really. There may be minor differences in size or formatting. But both types of checks include the same fields for crucial information: the check number, routing and account number, date, payee, amount, memo and signature.

Business owners (or their accountants) can also order checks through their banks the same way that individuals can order personal checks.

Do business checks clear faster than personal ones?

Not really. Both types of checks generally take about two business days to clear, but this varies by financial institution.

Can I use a different name on my business checks?

Yes. If you use a “doing business as” (DBA) name, you can register it when you apply for a business checking account and include it on your checks.

Can I use a personal check for business expenses?

Although it is possible to use personal checks for business purposes, it’s not generally a good idea because it complicates bookkeeping, budgeting and tax preparation.

It’s crucial to avoid mixing your personal and professional expenses if you run your business as a limited liability company (LLC), because a creditor could potentially argue that you’re personally liable for your company expenses.

What kind of expenses can you add to a business checking account?

Business owners — including sole proprietors, partnerships and corporations — can use business checks to pay for any expense associated with their business. Examples include payroll, tax payments, office equipment and operating expenses.

How can Chase help you set up a business checking account?

As a business owner, you’d likely benefit from the flexibility that comes with maintaining both a business and a personal checking account. If you have additional questions about either type of account, you can reach out to a Chase business banker for more information.