If you own a small business, having a separate business checking account is a must.
A business checking account offers you a few perks that cannot be found in a standard consumer checking account such as customer payments. The downside is that small business checking accounts often carry a hefty monthly fee.
Whether you are just starting out or looking to invest in a new business, this post may help you narrow down your options.
Let’s take a look at some of the factors that can be considered before choosing the best business checking account.
Check Out: Best Personal Checking Accounts
Best Business Checking account: Things you should consider
Business Checking Account
Let’s look at what makes a business checking account truly unique. The account has to be separate from the owners personal account. This separation comes in the form of separate bank statements, debit cards and check books. In other words, your business is a completely separate entity. Any funds from the business checking account can only be spent on company expenses. You cannot apply funds from your business checking account to your personal expenses. This separation and business structure is the main difference between a small business checking account and a personal business account.
Best Business Checking Account Options
Different business checking accounts offer different account features at different prices. Carefully compare the features and price points before you make your selection. After all, you want the account that is right for you, and you want to use a financial institution that you can rely on. The best business checking accounts in 2022 are those that meet your needs, fit your budget and that you feel confident using.
Types of Business Checking Accounts
Business owners have two options when it comes to business checking accounts. One is the traditional business checking account, and the other is a merchant services account, which is used to process credit card transactions.
Business Checking Accounts
Most business owners prefer business checking accounts because they offer a check writing feature that allows business owners to pay bills, make payroll, manage cash flow and more. However, not all business checking accounts have the same features. When choosing a business checking account, look for one that offers the account type that best meets your needs:
Business Checking Accounts with a Regular Checking Account
Some business checking accounts are almost like a hybrid of a standard business checking account and a traditional checking account. For example, you may have the option of choosing an account with a low minimum balance that can be easily funded by a personal checking account or a checking account that has a higher minimum balance that can keep you from using your personal funds.
#1. Bank Novo — Powerfully Simple Business Banking
The bank Novo offers a variety of online features that make it extremely convenient to do business online. It has eStatements, mobile banking, and Business Online Banking. You can manage all of your cash flow needs online. Among its services, it offers an online portal for you to set up payments for vendors. It has an online interest checking account. It has several scholarship programs for children of its employees. It has prizes and incentives for people who open these accounts.
The bank Novo has great international services for conducting online business. It has a Spanish language online chat service. It has a Spanish language website, and it includes an easy-to-understand Spanish manual for its banking services. It has a Spanish lesson guide for bank employees. It offers a downloadable .pdf version of its Spanish online banking services.
It is not only a great international for business banking services, but it is also a great bank for connecting with entrepreneurs in the Philadelphia area. It offers a free bi-monthly networking event that is open to anyone who is local in the Philadelphia area.
#2. Radius Bank — Tailored Checking
Radius Bank offers the best business checking account for the small business owner. There are no minimum balance requirements and the no monthly fee requirement. They are an online bank, which means that you can not use their ATM’s.
You do, however, receive a Visa check card to use as needed. This card is perforated, so you can easily tear up the receipt at the end of the day. It also comes with a chip which makes it more secure than the typical magnetic strip. If your business processes a lot of card transactions, this is a huge plus.
You can find Radius Bank here.
#3. Citizens Bank — Clearly Better Business Checking
With no monthly service charges, account holders will appreciate the benefits of free online banking and bill pay, meaning it’s easy to deposit checks, manage your finances, and access your account from anywhere. Another benefit of the Citizens Bank Clearly Better Business Checking account is the 50,000 FitPoints offer for those who reach the minimum monthly balance each month.
#4. Huntington Bank — Unlimited Business Checking
#5. Chase — Total Business Checking
#6 BlueVine — Earn Interest on Your Business Account
BlueVine has the same high-yield interest rates and account features as other business checking accounts. There are monthly maintenance fees, and it doesn't offer a debit card.
How to Open a Small Business Checking Account
The type of business checking account that you open will depend on your financial needs, but there are some general guidelines you can follow in order to ensure you find the best fit. Check with friends and family to see if anyone else successfully opened a business checking account with a specific bank. If they did, they can tell you about their customer service experience and whether they were happy with the interest rate they received on their deposits. Use online reviews and ratings to help you narrow the field.
Your business may not require a lot of transactions, but you do have to keep money in your checking account at all times to meet the minimum balance requirements. Availability, accessibility, and interest rates are also other important factors to consider. If you plan to deposit a lot of money, you should look for capitalization rates that are fixed, which means they will not change based on how much money you have in your account. You can also look at some online T-bill rates to compare with the rates that you are being offered.
Key Factors to Consider When Choosing a Business Checking Account
A good business with reliable products and services is the backbone of the business industry. In this competitive global environment, it is hard for any business to thrive and be successful without proper business practices. That said having the right business connections and great business products and services is an ultimate necessity.
Technological innovations over the past decades have made having a business online easier than ever. A business can easily and effectively reach customers through a variety of online services and social media platforms. All of this, however, heavily relies on your business having a reliable and functional online presence.
Some of the key factors that you need to consider when searching for the right online business provider are:
- The cost of use: You want to make sure that whatever you choose is going to be cost effective for the business.
- Data security: No business can survive without confidentiality and efficiency. Capitalizing on these factors will not only increase your business revenue but will also help you protect your investments. The business you choose should, therefore, provide you with secure and functional online tools with state of the art security.
- Customer service: If your business relies on customer satisfaction to be successful, then it is crucial that you choose a business that can meet the needs of your customers as well as provide you the support and resources you need to run your business effectively.
It's important to keep fees in mind while searching for the best checking account for you. We recommend using this calculator from the American Bankers Association to determine how many transactions your average monthly balance would need to hit before upgrading to a more expensive account.
What are some of the worst practices some checking accounts impose?
Many checking accounts offer a variety of perks that come with a monthly or annual fee. Although they can be tempting, this charge adds up and impacts your overall net income. Some of the worst fees associated with checking accounts include monthly maintenance fees, overdraft fees, ATM charges, and minimum balance fees. As always, it pays to be diligent and read the fine print. You may be able to work around or negotiate against some of the fees associated with a checking account. For example, some banks offer to waive fees if you balance a minimum monthly deposit amount to an account.
How can I determine what checking account may be the best fit for me?
The best way to know which type of checking account is right for you is to do your research. Find out what banks are available in your area, and what types of accounts they offer. Make a list of your monthly expenses. Once you have a good idea of what's required by the accounts you have in mind, sit down and do the math. The features you want and the fees you want to pay for each account will determine the type of account that is the best fit.
Benefits and Perks
You will get your account monitored daily and monthly so that you can get to know the account activities. This will help you identify any error in the transaction made in the account as well as any suspicious transaction to avoid further problems. In order to get the timely alerts on your account activities, you need to ensure that you provide the correct account number and personal details to the bank.
Interest on Checking Account
Some of the well-known banks offer cash back in form of interest on the checking account. With this, you are assured of getting some money as a reward after closing the account. This is possible when you have good management over your account activities.
Convenience of Making a Cash Deposit
Some banks will provide you with a deposit card if you open the account in their bank. The card can be used to make a cash deposit in any ATM machine. This reduces the hassle of going to the bank in order to deposit cash in the account. It is important to note that the amount of cash you can deposit in ATM machine is capped by the bank depending on the type of loading status. With this, you do not have to queue into the bank in order to make the deposit. This really helps save a lot of time especially if you are running late for work.
Special Offers on Specific Products
You will be allocated a card that you can use to get better offers on specific products in the market.
Customer service is an essential part of maintaining your checking account. The company will always make its offers based on your needs. You should remind them how important the checking account is to you, and how you envision it can work for you.
If you have a business checking account, the company knows that your account is important to you and will work hard to keep you. You will receive high customer service from the company to make sure that your experience is a positive one.
Credit Checks – As a small business owner, there’s a good chance that your business is new. You will need a business checking account, and you will likely need to provide several forms of identification to open a new account. You may even be asked to provide a credit score check. This is standard in the banking business, and you shouldn’t worry about it. If you have an impressive credit score, the bank knows that you are a good business risk. If you have a poor credit score, the bank knows that you can afford to make bad business decisions. Either way, you’re going to open your business checking account.
Why You Should Separate Your Personal and Business Bank Accounts
Have you heard of the Bank Secrecy Act? It’s a United States law designed to counter money laundering and other illegal activity in the country. One of its rules explicitly states that banks may opt not to offer personal and business bank accounts to the same person. Not all banks take advantage of this rule, but some (particularly larger ones) require you to open new accounts and close the old ones when you become a business owner.
Why is this? Banks may be worried about collecting information for anti-money laundering laws. With different accounts, banks ensure that they are able to monitor every transaction. Not only this, but separate accounts are a quick way to recognize suspicious activity and the potential for money laundering when it arises.
Keep Things Organized
Keeping your accounts organized is extremely important. You want to keep great records of all your financial activity since there are so many different ways to track it. You may want to track your financial information based on which company you are doing business with. This will allow you to quickly see which company is making money for you while you are also making money for them.
For example, maybe your capital comes from your back office business and you need to analyze your business expense. Or your situation is the opposite, and you receive most of your income in the form of income from your customers.
Maybe you need to take advantage of a tax credit. Keeping organized accounts will allow you to see the overall picture. It will be easier for you to figure out how much money your business generates, and it will also help you know how much money you have available to start new businesses.
This is an important aspect of business that can be extremely helpful. However, you need to look at more than just the numbers. You need to be able to see the amount of money you have available for your customers. This is a good way to measure the health of your business.
You should also keep a record of your loans. You need to be able to examine just how far you can expand your business and how you need to manage your finances. Your overhead and overhead costs are also going to be important factors in your cash flow.
Is a characteristic of a very good business checking account. Practically, it is essential if a business has to deal with cash flow issues and potential fluctuations in the amount of money to be kept on the account. Flexibility means there should be no minimum balance requirements and the account should allow to withdraw funds and make deposits as often as possible.
Is an important concept when starting a business.
To function properly, your business still has to be accountable to you.
This also means that you have to be accountable to the Canada Revenue Agency(CRA).
The CRA requires that businesses have specific reports filed each year to prove their profitability and legitimacy.
One of the documents the CRA will ask for is an income statement for the previous year if you intend on claiming any tax deductions or credits.
The reports that you submit are important as they can affect the amount of taxes you pay…or even the amount of tax you might not have to pay.
Are you wondering where to go to get access to your company income statement for your previous year?
Well, here are 3 sources where you can find this information for your business.
Business checking accounts are all about reputation. Unlike personal checking accounts, they’re designed to provide customers with a quick, convenient way to manage business finances that’s more accessible than a business savings account. When you open an account with a bank or credit union, you’ll need to provide more information than you would for any other kind of account. Providing more information than is necessary for just about any other kind of account gives the financial institution the credibility to determine if you’re adequate for service.
If the IRS suspects that the taxpayer has been dishonest and has engaged in fraudulent activities, they may investigate and determine once and for all if the business has been operating in accordance to the law. The purpose of an audit is for the IRS to conduct a comprehensive analysis of all the books and records kept by the business.
The IRS may audit a corporation or an LLC as well as an S corporation or an LLC. Whether the IRS will close the books of the business or investigate only the income or expenses of the business depends on the risk or the potential of the business engaging in fraudulent activities. The IRS may decide to investigate the business in order to collect tax liabilities that can be established on the basis of the books and records of the business.
Every taxpayer is at risk at being audited. Depending on the type of activities that have been followed by the business, it may attract a higher audit risk. If the taxpayer has high audit risk, it is because the nature of the business and the condition, as well as the size of the business, may suggest that the taxpayer is most likely to be investigated. One shall be able to see at the time of the filing of the tax return
Find the Right Bank Account for Your Small Business
When it comes to trusting a bank, your small business needs a bank account they can depend on. You want a business checking account that gives your business the reliability, security and flexibility it deserves.
As with any business decision, there are trade-offs when it comes to your business checking account. The following issues are common ones to consider:
Does your provider have what you need? Obviously, you want a bank account that will give you the service and convenience you expect. Think about your business needs and decide what is most important. Consider how much money you plan to keep in the account, what your business spends on daily, and what type of transactions are most likely. Consider if you plan to use a debit card frequently or whether you prefer to use cash. If you are concerned about protecting your identity from hackers, look for an account with secure Internet protocols.
So how do you make the right decision about your business checking account?
For starters, you want an account that is easy to manage and accessible for your business. A small business checking account can also help you save on costs, and you typically get a range of options such as free online banking and no monthly account service fees.
Checking accounts offer convenience to your business, and choosing one that doesn’t cost you money can help you save more in the long run. Just make sure the account aligns with your business practices, your desired features, and your budget.