Whether you're in the process of starting a small business or looking to change banks for your existing business, there are many benefits to a business checking account. One key benefit is being able to separate business funds from personal funds to better track and manage income and expenses. However, some business accounts have different offerings. Knowing what to look for can allow you to choose an account that meets the specific needs of your business. Establishing a good relationship and trust with your bank can make it easier to meet your future business needs, and work out any problems that may arise down the line.
You can apply for a checking account for your business as soon as you receive an Employer Identification Number from the IRS. It’s also important to note that in some cases, having a business bank account is required. For example, if your business is structured as a corporation or LLC (limited liability company), you must have a bank account for the business that is completely separate from your own personal bank account.
To find the right business checking account, here are some tips to consider:
• Review the fees and requirements associated with the account. If the annual fee is waived for the first year, take into account what it will be in the following years. Also, if you will be transferring money to or from this account often, ask about limits and which fees to expect if you go over the transfer limit during a specified time period.
• Ask if there is a minimum daily balance requirement. Will you have to maintain a certain amount in the account in order to avoid fees? If your business is just starting out, or you purposely plan to keep the account balance low – you may want to reconsider if the account has a high minimum daily balance requirement.
• Consider introductory offers. Some banks offer cash bonuses or points for new customers when they make a certain number of deposits or transactions within a set time period. Some may also offer additional perks or rewards for debit card usage. Evaluating these types of incentives, and considering whether or not they would apply to you, can be helpful when deciding between different business checking options.
• Where are the bank’s physical locations? Although many banking tasks can now be done online, many business owners want to have a human connection with their bank. Even if you rarely need to go into the bank, having a branch close by is something to consider. You don’t want to have to travel for hours in the event that you unexpectedly need to conduct business in person.
• Look at other services and options available from the bank. Even if you only need a business checking account right now, your needs may change in the future. Starting a banking relationship with a bank that offers business loans, cash management, and business investment options could come in handy if you end up needing those services in the future.
• Be sure the bank is insured. Most banks in the U.S. are insured by the Federal Deposit Insurance Corporation (FDIC), which generally covers up to $250,000 per depositor in the event of a bank failure. Before deciding on a bank, it’s a good idea to ensure that they are covered by FDIC insurance. Some banks, such as BankFive, are also insured by the Depositors Insurance Fund (DIF) which covers 100% of deposits.
No matter which type of business checking account you choose, you should ensure that you’re working with a bank that values its small business customers. If you don't get that feeling from a bank you're considering or currently working with, that may be reason enough to contemplate another option. Running a small business takes up much of your personal time, and your banking needs shouldn’t interfere with that. By taking the time to evaluate all of your options, you’ll have a better chance of finding the account that’s right for you, and help pave the way for a long-lasting business banking relationship. If you’re interested in learning more about BankFive’s business checking account options, contact us today!