What is a Bank Statement? (And Why You'll Want To Hold On To It) | Square (2024)

Please note that the information contained in this article is limited in scope and is only intended as a high-level overview of the topics discussed. The information is current as of the publication date only, and the laws (and associated agency and/or judicial interpretations) on the topics discussed could change at any point in the future. Block, Inc. (including its affiliates, subsidiaries, employees, officers, directors, attorneys, and tax advisors) undertakes no obligation to update this article for future changes in the law. In addition, laws vary by jurisdiction, and this article does not attempt to address all jurisdictions — for example, states, counties, or cities often have requirements that differ from federal law. Nothing in this article is or should be used as tax or legal advice. In particular, this article cannot be relied upon for the purposes of avoiding taxes, penalties, or other obligations under applicable law. For guidance or advice specific to your business, you should consult with a qualified tax and/or legal professional.

Managing finances can be stressful. Recent YouGov data shows that financial stability and well-being are tied intrinsically together for many Americans. Of the financially constrained, only two in five of the group felt mentally healthy. While cash flow management can take a mental and emotional toll, there are tools at your disposal to make maintaining your business less taxing.

There is a range of records and documents business owners may want to keep track of to manage everything from payroll to bookkeeping. As a small business owner, regularly checking your bank statements allows you to check your spending and saving habits, track the account for any mistakes or fraud, file taxes, and apply for loans.

What is a bank statement?

Bank statements are documents that summarize the transactions of a bank account during a period of time, typically monthly. These statements can come from a checking or a savings bank account, investment account, and credit card records. For businesses, there are several reasons why you may want to hold on to these business documents. Here are a few details typically included in a bank statement:

  • Information about the bank itself, including contact information
  • Your account details, such as your name, bank account number, address, and other personal information
  • A summary of your transactions, including deposits and withdrawals with a beginning and ending balance
  • Period of time summarized in the statement

Holding onto bank statements can help demonstrate business activity. Your bank statements and credit card statements also serve as records of your business activities. This is a way to see a picture of your account activity at a glance and can help you find any discrepancies.

Filing taxes

Bank statements will help track your business’s progress and, in turn, can serve as a financial record when it comes time to file taxes. These statements are a record of expenses to your business that include item descriptions and costs. While a bank statement can serve as a record of expenses and purchases for your business, be sure to keep gross receipts and other business documents in order to give a complete picture of your business’s finances when filing your taxes.

There are certain tax forms, such as Form W-2 and Form 1099-MISC, where bank statements can be especially useful in filing your tax return. In the U.S., the IRS recommends businesses hold on to their tax returns for at least three years from the time of a tax filing.

Separating your business and personal accounts can help you keep track of the activity related to your business and help protect your personal accounts. Not only will holding on to your bank statements make tracking business expenses more accessible come tax season, they can make finding tax deductions associated with those expenses harder to miss.

Applying for loans

When applying for a loan, a lender will typically ask you to include bank statements as a document during the application process. Reviewing your cash flow and income will help a lender determine if you’re eligible for a business loan. Your bank statement can be used to see how often your business is making deposits, inflows and outflows of cash, and how regularly the account sees activity.

Self-employed individuals and contractors may seek a bank statement loan in lieu of a traditional loan. These loans can be issued based on personal information and bank statements rather than the W-2s, pay stubs, and other employer verification forms a lender may ask of you in a traditional loan application process.

What is a Bank Statement? (And Why You'll Want To Hold On To It) | Square (1)
What is a Bank Statement? (And Why You'll Want To Hold On To It) | Square (2)

If you’re a Square Banking customer, find your Checking statement by navigating to your Square Dashboard and going to Balance > Locations > Checking Settings > Account Statements to download your statement. You can also access your statements from the Activity page in the documents dropdown menu. Be sure to check your account for when checking and savings statements will be available to you monthly.

What is a Bank Statement? (And Why You'll Want To Hold On To It) | Square (3)

What is a Bank Statement? (And Why You'll Want To Hold On To It) | Square (4)

What is a Bank Statement? (And Why You'll Want To Hold On To It) | Square (2024)


What is a Bank Statement? (And Why You'll Want To Hold On To It) | Square? ›

Bank statements help you keep track of all the transactions made in your account during a specific period. You can use it to track expenses, identify accounting errors and spot potentially fraudulent activity. These statements can be invaluable in helping you understand what's going on with your money.

Why does Square want my bank statements? ›

We need documentation to confirm some details about your account and better understand how your business tends to process payments. This includes details about the goods or services you provide through Square and documentation of your transactions.

What is a bank statement? ›

A bank statement is an official document that summarizes your account activity over a certain period of time—typically one month. You'll find records of all transactions—both incoming and outgoing—so you know exactly what was going on with your funds during that period.

Why do they want my bank statement? ›

Loan applications: If you apply for a loan, you may need to provide your bank statements to the lender. This is so that the lender can assess your financial history and determine whether you are a good credit risk.

Why is the bank statement? ›

A bank statement is a document that summarizes the activity on your bank account over a specific period of time. It shows all your deposits, withdrawals, interest accrued, opening balance, closing balance and account information.

What is Square on bank statement? ›

If you make a purchase with a merchant who uses Square to accept payments in person, over the phone or by emailed invoice, the characters SQ* or gosq.com, the merchant's name or business name and business type will appear on your credit card statement. Charges can appear on your statement in a few different ways.

How do I get my bank statement from Square? ›

If you're a Square Banking customer, find your Checking statement by navigating to your Square Dashboard and going to Balance > Locations > Checking Settings > Account Statements to download your statement. You can also access your statements from the Activity page in the documents dropdown menu.

How to make a bank statement? ›

A bank statement requires some general financial documents. The account holder's name, account number, account type, a mobile number linked to the account, and email address are all necessary. You are also aware that you will require a bank statement application in conjunction with these documents.

What does a good bank statement look like? ›

Your bank statements should reflect a healthy balance between income and expenses. Avoid excessive spending or reliance on credit to cover your monthly expenses. Debt Repayment History: If you have existing loans or credit card debt, your bank statements should demonstrate a consistent and timely repayment history.

What is the purpose of requesting a bank statement? ›

These statements help monitor account activity and check transactions. They also aid in financial planning. Customers often review bank statements to prevent fraud and avoid high account maintenance fees. They can get a bank statement through digital access or physical copies.

What does your bank statement say about you? ›

Your bank statement reflects the activity in your bank account, including deposits and withdrawals. It provides a comprehensive view of your cash flow within that specific account. Credit card statements are dedicated solely to showing the activity on your credit card.

Why do I need to provide bank statements? ›

Your bank statements can show a lender your salary, or other sources of income which lenders take into consideration for their calculations of what you can afford to borrow and ultimately repay. Money management.

What is your bank statement? ›

A bank statement serves as a snapshot of all the financial activities for an account within a given time period. This includes transaction history, account balances, fees and interest earned and personal information like, your account number.

What is bank statement important? ›

Bank statements are one of the most essential tools in financial management because of the transparency and accountability they offer. Regularly reviewing bank statements helps one identify errors or discrepancies in transactions in a timely manner and rectify any errors early on.

What can someone do with your bank statement? ›

Identity theft: Criminals can use your banking information and any other personal data they collect to steal your identity. These schemes are often employed to open new credit cards, receive your tax returns and commit other unpleasant forms of fraud.

Is Square a threat to banks? ›

Ron writes this report after surveying American banks and credit unions, and he notes that big fintech firms like PayPal and Square/Block were the most frequently cited significant threat in 2022 and 2023 but, this year, he introduced a new competitor: the US government.

Can Square take money from my bank account? ›

Square may debit a bank account for one of the following reasons: You process a refund. A cardholder disputes a payment by issuing a chargeback. To charge you for a paid service.

Is the Square app safe? ›

Security at Square

To protect Square account holders and their customers, all information our customers submit is encrypted to our servers, regardless of whether you're using a public or private WiFi connection or a data service on your phone (such as 4G, 5G or EDGE). Square complies with all required PCI standards.

How does Square verify your bank account? ›

To manually verify your bank account, Square will transfer and withdraw a small amount. Sometimes this transfer and withdrawal may process simultaneously, so you'll need at least $1.00 in your bank account before you begin the verification process.

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