In General, when a person has his businesses, he has two bank accounts.
That person will have all his income and expenses, which is known as personal banking and second in which, he will have all his business income and expenses, which is known as business banking.
Even though having two different bank accounts may be challenging, maintaining uniformity is undoubtedly a good practice.
Key Takeaways
- Personal banking is designed for individuals who need banking services for personal use, while business banking is designed for companies and organizations.
- Personal banking offers checking and savings accounts, loans, credit cards, and mortgages, while business banking provides business loans, lines of credit, and cash management.
- Business banking requires additional documentation, such as business licenses, tax returns, and financial statements, whereas personal banking is more straightforward.
Personal Banking vs Business Banking
A bank account created for personal use is called personal banking. Personal banking is mainly for the public. One bank can have multiple branches in different areas within a city. People can open accounts in any branch. A bank account created for business transactions is called business banking. It has a high processing cost.
Personal banking is banking designed for the general public, which has its bank branches set up in multiple locations in a city that handles customers holding these personal bank accounts. This account is used for taking out and making transactions for self-use only; personal and private use are only stated as drawings.
Business banking is banking solely for businesses, which helps them do stuff for the enterprises, which helps raise profits by providing credit or raising funds for them and includes services such as professional business advice. This bank is considered a repository bank, and people make transactions in this bank related to business and their corporate needs only.
Comparison Table
| Parameters of comparison | Personal Banking | Business Banking |
|---|---|---|
| Nature of services that are offered | The processing cost is very high. | Tailor-made services are offered. |
| Processing Cost | The processing cost is low. | The processing cost is very high usually. |
| Profit | Generally, less profit is earned through this banking. | Generally, a lot of profit is earned through this banking. |
| Value of transaction | The Value of the transaction is low. | The value of the transaction is high. |
| Function | Used for business purposes only. | Used for business purpose only. |
What is Personal Banking?
Personal banking is associated with personal use only. The personal bank provides services to an individual or families to fulfil and help meet their financial needs.
Personal banking allows giving loans to an individual; deposit accounts are also offered, and a feature where a person advises how to intake proper personal investment planning.
These services are provided to customers through different branches of personal banks in various city areas. They offer services like brokerage too.
When a person has a personal bank account, they get services like having a debit card and a credit card, mortgages, etc. In short personal banking is not for business use at all.
It is lovely for an individual to manage and keep track of their assets. There is an allowance for only one person to deposit or withdraw money from the account in personal banking.
This feature provides high-security measures to ensure the funds are transferred to the right person having access to the funds.
As this kind of banking focuses only on individuals, they provide various other services to those holding a personal bank account in that specific bank to which no one has access other than that person.
What is Business Banking?
Compiling financial bank statements of a business and tracking the necessary transactions are essential elements to be carried out even when a person is running a small business.
This information is needed to track your business’s financial health compared to the ongoing market and make an intelligent decision suitable for a person’s respective business.
For this purpose, there is the existence of a business account that is solely for business use only.
This business banking helps business owners manage the cash flow of their business and profits accordingly. Acquiring business banking helps in allowing the owner to write and receive checks through electronic means too.
Even if a person has a valid personal banking account, it is very significant and essential to have a separate business account for consistent practice. This would benefit the business at large for sure.
Business banking comprises dealings of finances of the business by providing services like business to loans, professional advisors for planning strategies for business growth, saving accounts with, credit, etc.
In short, this kind of bank or a branch of it occurs only for business purposes, transactions and sealing only.
Main Differences Between Personal Banking and Business Banking
- In business banking, there is a need to pay various fees occasionally after forming an account, whereas, in personal banking, there is no need to pay any such fees.
- A business account helps to hold and manage a limited number of companies, whereas it is the opposite in personal banking.
- Having a business account and acquiring business banking is a legal requirement when a person has his own business. In contrast, banks may not allow businesses to manage their money in personal banking.
- Business banking is solely used for business purposes, and personal banking is exclusively used to manage finances.
- Business banking would mostly have a high volume of transactions, whereas personal banking would have a comparatively low volume.
- https://www.jstor.org/stable/40604633
- https://www.sciencedirect.com/science/article/pii/S026840120700045X
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