Business owners should familiarize themselves with business bank statements sent by your bank to account holders of a business account, rather than a personal account.
What is a Business Bank Statement?
A business bank statement includes a summary of all transactions made with your business account. Each statement covers a set amount of time, known as a statement period. A statement period is typically one month.
Business bank statements list transactions individually and in chronological order, allowing you to see a breakdown of the income and spending of your business. This breakdown is useful in managing the financial aspects of a business.
What Does a Business Bank Statement Look Like?
Business Bank Statements have a variety of appearances depending on which bank your business uses. There are some commonalities between all business bank statement templates.
If your business chooses paper statements, the statement your business receives should be on the official letterhead of the bank you use.
The top section traditionally contains the bank’s general information, like the name and address of the bank. Following that is often a section about your business, including the business name, the business address, and the name of the individual who heads the business bank account. This section will have a record of the account name and number.
Most business bank statements will provide a summary of the account over the statement period, which is traditionally one month. This summary will include the balance at both the beginning and the end of the period, with the total amount of money deposited and withdrawn from the business account throughout the period.
After the summary, most banks will break down the transactions made by the business, both income and withdrawals, line by line. This allows a business to better track profit margins and determines how well they are managing their money.
How to Receive a Business Bank Statement
At the end of each statement period, your bank will send out your business bank account statement. There are two ways you can choose to receive this statement – electronically or by paper copy. There are advantages to both types of bank statements for businesses, and the style you choose is at your discretion.
Electronic Business Bank Statement
You may choose to receive the statement for your business account through a secure website, portal, or email. This is typically called an e-statement and allows you to view your business bank statement from anywhere with a stable internet connection.
Paper Business Bank Statement
If you prefer a hard copy, your bank can send you a physical paper copy of your business bank statement. Paper statements can be useful if your business uses a paper-based filing system.
What are Business Bank Statements Used for?
Business bank statements are an invaluable financial tool for your business. These statements can help to keep your business accurate and organized.
Filing Tax Returns
Business bank statements are used as supporting documents for the business’s tax forms. Referencing the statements your business received during the tax year can ensure that you can file your taxes correctly. Additionally, if audited, the bank business statements can be used as proof that the filed business tax returns were accurate.
Applying for Loans
When considering granting loans, lenders want to know that a business generates income. Since business bank statements show a breakdown of the income created by the business during the statement period, business bank statements can help secure the loan.
Reconciling Accounts
Through a process known as bank statement reconciliation, your business bank statements can be easily compared with your business accounting books. This helps find and correct any discrepancies in your account books to ensure that business records are accurate.
Tracking Checks
If you use checks in your business to pay employees or purchase goods from vendors, it can be impossible to know when they have been cashed. Your business bank statements will allow you to see if there are any uncashed checks recently sent out or if all checks have been cashed.
Budgeting
Business bank statements break income and spending down into digestible pieces. This can be incredibly useful to see the spending habits of the business. The business bank statements will show where money is going. You can then compare this to previous business bank statements to determine the typical amount spent on each category of business costs per month.
They can also note any unexpected sources of income for the business, allowing you to expand upon them if you so choose.
What to Look Out for When Checking Business Bank Statements?
When you receive your business bank statement, there are some things to watch. Carefully checking your business bank statements will ensure that your business account is safe from fraudulent activities.
If you receive physical copies of your business bank statements, they should be in a sealed envelope. If the envelope is open or torn, reach out to the bank that manages the business account to receive a sealed copy.
Check expenses to ensure that there aren’t any duplicate charges or unauthorized expenditures on your business account.
Double-check that the statement summaries make sense, and reach out to your bank if you notice discrepancies in your business bank statements.
Summary
A business bank statement is an official document sent by your bank at the end of each statement period. The statement shows the account holder all the transactions, withdrawals, and deposits made by the business over the statement period.
By utilizing business bank statements effectively, business owners can ensure that their business’s finances are in order and healthy. Carefully checking business bank statements can help protect a business from fraudulent spending and help create a budget to maximize the income and minimize the expenses of your business.
