Maintaining a distinct banking relationship for your company’s financial transactions is prudent. A business checking account could be helpful if you are a freelancer, in a business partnership, or managing a limited liability company. Choosing the right business bank account and the ideal business checking account can be difficult when you’re first getting your startup off the ground, especially if you don’t have a lot of experience in the business world.
Starting a business requires a lot of paperwork, but having a dedicated bank account can help streamline the process. It would be best to look for a bank account that can adapt to your changing banking needs as your company grows.
Why you might need a business bank account for your startup
The question of whether or not you need a separate business checking account may have crossed your mind. A business checking account is functionally equivalent to a personal checking account in that money can be deposited and withdrawn at any time.
A personal bank account can be used for both personal and professional purposes.
A debit card account functions similarly to a personal checking account in that money may be deposited and withdrawn, purchases can be made with the card, and an overdraft may be available.
Next, think about if you’ll need a company loan down the road or if you’d instead put your money in savings. Initiating a positive and trustworthy connection with your bank is an excellent place to start with a new checking account.
Of course, the checking account itself is just as critical as the bank that issues it. In light of that, we’ll delve into the factors you should consider while selecting a business checking account.
Take some time to consider your banking requirements
One’s banking requirements should be one’s first point of reflection.
Many financial institutions provide excellent business product lines, including business checking accounts, bank loans, business credit cards, tax advice, and the standard array of banking services.
Even if you’re just in the market for a checking account to cash payroll checks and process client payments, you might end up needing a line of credit or some other financial product pretty soon.
Take into account both your current and future financial needs when deciding which financial institution best serves you.
After you’ve narrowed down your needs for a bank, you may begin comparing local and national institutions.
You can get in touch with the customer service departments of the prospective banks to ask them questions about their products and services or set up an appointment to talk about your concerns in person.
If your company doesn’t need much more than a simple checking account, though, you may want to look into an online bank.
They usually have a wide selection of low-priced products. One drawback is the difficulty in cash deposits and the lack of personal connection.
Things to think about when picking out a checking account for your company
- Tech-based tools
Mobile banking and paperless bill paying are just two examples of the many digital conveniences that help modern businesses thrive. It is prudent, then, to investigate the electronic services provided in tandem with the bank account.
Financial organizations and banks alike are increasingly offering smartphone apps for account management. Before downloading the companion app, be sure to read user reviews to identify any problems that may have been encountered.
- Gains from a Relationship
Multiple accounts at the same bank can earn tremendous benefits, such as eliminating fees and providing preferred interest rates at some institutions. Because of this, you should see if your current bank offers any advantages for building a connection by opening a business account.
Your current bank’s business checking account alternatives may be among the best out there. Because you’re currently familiar with and satisfied with the bank, you can confidently open the account. However, if you don’t see any value in keeping your business and private finances at the same institution, you shouldn’t feel obligated to stay there.
- Place-based limits
Certain accounts at even brick-and-mortar financial institutions have geographic requirements that banking online can’t meet. It’s important to know if a company checking account you’re interested in is available exclusively online if the fees are deficient.
A verified check, cash, or a face-to-face meeting with a bank employee can be required based on the nature of your business. In these cases, it may be inconvenient to use a company checking account that is not linked to a physical location.
- Fees
A corporate checking account’s fees have the potential to rack up just as quickly as those of a personal checking account.
You may check how various providers’ rates, extras, and other costs stack up by doing comparison shopping.
Each dollar counts when you’re just starting, so it’s essential to research the new checking account’s cost schedule before opening one. In order to save money, your company should probably look for the most affordable options for the transactions it typically makes.
Although promotional offers such as no-fee billing cycles or reduced transaction fees are appealing, evaluating the whole package is essential to determine which option provides the most bang for your buck.
If a bank promises to waive the monthly maintenance fee if a certain threshold is met, you should investigate whether or not this applies to you.
- Savings accounts for businesses
If there is a complementary or comparable savings account, that is another crucial factor to consider with the business checking account.
Even while there are interest-bearing business checking accounts, you may still want to put any initial funding for your company into a savings account.
You may put money away for emergencies, or regular expenses with proper savings account without worrying about disappearing.
It is possible to set up automated payments with some banks. When the balance in your checking account exceeds a certain amount, the system will automatically transfer those funds to the savings account.
This is a fantastic perk since it allows you to earn a greater interest rate without risking overdraft fees or declining payments.
- Bank accounts for businesses vs. personal accounts
A business owner should open a business checking account for their company for various reasons.
The Small Business Administration claims that by keeping individual and business finances separate, business banking can reduce exposure to personal liability.
Debit cards and check-writing capabilities are available in many different types of checking accounts, including those intended for businesses. But there may be advantages to having a business checking account instead of a personal one.
While opening a personal checking account can cost as little as a single dollar at some banks and credit unions, opening a company checking account can cost five hundred dollars or more.
If you’re going to be running a business in addition to your day job, it could be better to maintain the funds for both in the same checking account.
- Additional resources
The last thing to consider before opening a new business checking account is whether or not it will grant you access to any bonus features.
Fortunately, many financial institutions understand the difficulties of running a new business and are willing to lend a hand. To this end, financial institutions may provide easy-to-use resources like a dedicated online learning center that offers live webinars, practical manuals, or even direct contact with a reliable business banking manager.
- Additional debit cards
A startup’s founders would inevitably be kept constantly occupied with the myriad of administrative activities that must be completed. That’s why it’s helpful to equip reliable employees with a business debit card. So, you won’t have to worry about keeping tabs on every expense or fielding pesky demands for repayment, even for necessities.
Bottom line
After launching your startup, you’re probably eager to start focusing on core business operations. However, choosing the best checking account can be a help or a hindrance in this endeavor.
Your new business can get the support and resources it needs with the correct checking account.
Before committing to opening a business bank account, it’s essential to do some research and think things through. Making a hasty choice that you regret is one of life’s worst disappointments.
