How to Choose the Right Business Checking Account
Selecting the right kind of account is a key part of a small business plan.
Launching a new business requires vision, ambition and careful planning. With so much to do, opening a business checking account may seem like an afterthought. Yet there are several reasons why it can be extremely beneficial to have an account that is dedicated to your business. A business checking account:
- Keeps your personal assets separate from those of the business.
- Enables you to separate payments to your business from deposits into your personal accounts.
- Streamlines bookkeeping, including profit and loss calculations and tax reporting.
Also, a business banking account can help you establish a banking relationship, giving you access to tools, resources and products that can assist you as your small business grows.
Here are some considerations to help you select the right kind of business checking account for your needs—and get your small business on track for growth:
Step No. 1: Find the Best Bank for Your Needs
As you’re deciding where to open your business checking account, your first question may be whether you stay with your personal bank or not. Is a large, national bank the right choice, or would the products and services of a regional bank better suit your needs? There are a variety of factors you may want to consider when weighing your options:
- Small Business Tools: Whether you’ll have access to small business cash management tools, such as point-of-sale solutions, quick deposit, payroll management and integrated payables. Can the bank process customer payments via credit cards or ACH?
- Location: Proximity to where you will be doing business so you will have branch locations and ATMs nearby for when you need them.
- Account Access: Online or in-person access to accounts to facilitate transactions and record-keeping.
- Loans and Financing Options: Availability of small business financing solutions, such as business loans and lines of credit, SBA loans and business credit cards.
- Personal Relationships: Access to a small business banker who can help you work toward your goals.
Some of these considerations may seem unnecessary when you first launch your business but remember: Almost all good businesses start with a solid plan that anticipates growth and future challenges. Finding a banker who can help navigate that path with you will make your account choices clearer as well.
Step No. 2: Consider How Your Business Will Operate
Before you choose a business checking account, estimate your average monthly balance and how many transactions you typically make. If your business is just starting out, checking accounts with no minimum balance requirements may save you from headaches. If you have a more established business, you may want to look for accounts that don’t have strict limits on transactions.
Additionally, think about the way you manage your business finances and what account features are most essential for you. For example, do you want to pay your bills online or make deposits remotely? Do you want the option to have business credit cards for your employees?
Depending on how your business operates, you may also consider these account details:
- Debit card availability
- Access to a savings account or other complementary accounts
- Minimum account requirements
- Fees on accounts and individual transactions
Step No. 3: Prepare Your Documents—and Questions
As with opening a personal bank account, you may need to compile some of your paperwork for your business before you open an account with the bank you have chosen. Check with the bank’s branch or small business manager to determine what documents you need to bring in. You might be able to chat with them online, over the phone or in person at a branch.
Put together any questions you have before you speak with a small business bank professional. You should also take time to look at the fine print of each type of account. Make sure you understand details such as:
- All costs associated with the account, including a required minimum balance
- Whether there are transaction limits or cash processing fees
If you have a clear understanding of your banking requirements, it will be easier to assess what features you need and how to minimize potential fees.
Three Things to Do
- Explore educational tools and resources for small business owners to help formulate your business plan and determine your needs.
- Consider the pros and cons of business banking for sole proprietors and early stage businesses.
- Explore our small business banking services to learn more about business checking accounts and other products.
