A checking account is a type of money account provided by banks and other financial institutions to empower businesses and individuals. Since the modernization of banks and evolution of financial tools, checks have been the first faculties of transactions between businesses. Checking accounts allow account holder to deposit or withdraw money via checks instead of cash. Like a personal saving account, checking accounts are easily accessible. The difference of a checking account from a basic savings account is the ability of the account holder to issue checks.
Checks are used to advance a payment instead of using cash. The account holder is given a checkbook which contains all the checks that he needs to operate his account. The account holder can submit these checks to establishments or the paid party to be redeemed in the bank. The bank then debits the amount written in the check against the assets of the account. Checks are used in larger transactions such as payment of rent, paying for a service where cash is too large to give out, and to advance a payment to a given date. Checks allow consumers to expand their transactions that were once limited to cash transactions. Businesses also rely on checks for their accounting since it serves as a record of there cash flow.
Account owners must be responsible for the amount that he writes on the check. The total amount given out should tally with the value of the account or else the bank can issue a penalty or close the account. For businesses, checking accounts cannot be closed because it is the money pipeline for their expenses and contracts to suppliers. All small startups must consider a checking account if they are to grow and prosper since it clears up a business’ accounting. Without a checking account, operating a business or managing your home will be difficult.