Opinions expressed by Entrepreneur collaborators are their own.
When establishing your startup, it can be challenging to choose the right bank and checking account for the business, especially if you have limited business experience. You need a bank account that not only meets your current needs, but will grow as your requirements evolve with your growing business.
You might be wondering if must business checking account. While a personal checking account will probably meet your needs for your basic day-to-day business activities, you should consider whether you need a business loan in the future or want to keep the earnings in a savings account.
Your new checking account can be the start of your banking relationship, so you can begin to establish goodwill and trust. However, while the bank is important, the features of the checking account are also vital. So, here we will explore how to choose a checking account for your business.
Think about what you need from your bank
The first thing to consider is what you need from your bank. Are you just looking for a checking account or do you also need a small business loan? There are many banks that not only offer a variety of business checking accounts, but also have great business product lines such as business loans and lines of credit, business credit cards, and tax consulting.
While you may be looking for a checking account to process your checks and manage customer payments, you may need a line of credit or other products in the near future. So take some time to think about your immediate and potential future needs to see which banks can meet your requirements.
Once you have a short list of things you need from your bank, you can start comparing offers from different banks both in your area and nationally. If you are considering multiple banks, you can speak to their customer support team and get product information or even schedule an appointment to discuss your requirements.
However, if your startup will only require basic account services, you can consider online banks. They tend to offer a variety of products with minimal fees. The downside to this is that you don’t have face-to-face interaction and depositing money can be difficult.
Connected: 5 signs it’s time to change your business bank
Considerations for choosing a business checking account
1. Location Restrictions
Even if you’re not looking for an online bank, some brick-and-mortar banks place location restrictions on certain accounts. If you’re considering a business checking account with very low fees, it’s worth checking if it’s online only.
Depending on your transaction, you may need to speak to a bank representative in person, pay in cash, or send certified checks. In these scenarios, having a business checking account that does not have branch access can be a problem.
2. Digital tools
Most modern startups are taking advantage of digital tools like mobile deposits and digital bill payments. So it’s worth evaluating what digital tools come with the checking account.
Many banks and financial institutions have an app that allows you to manage your account from your mobile device. Make sure you check the reviews of the companion app to see if there are any potential issues.
As with a personal checking account, fees on your business checking account can quickly add up. For most startups and small businesses, every cent counts, so it’s extremely important to check the fee structure for your new checking account before signing up. If your bank offers a fee waiver for monthly maintenance fees, be sure to check the criteria to make sure you can meet the minimum balance required to waive it.
4. Connection Privileges
Many banks offer great benefits such as fee waivers and preferential rates if you link multiple accounts. So it’s worth checking whether the bank that holds your personal checking account offers relationship benefits if you open a business account.
You may find that your existing bank will provide some excellent account options, and since you already know and enjoy the bank, you can feel confident with your new business checking account. On the other hand, if there are no benefits to having the same bank for your personal and business accounts, don’t feel obligated to stick with them.
Connected: 5 things you need to have to open a business bank account
5. Additional Debit Cards
When you start up, you will have a lot of administrative tasks that will keep you busy every day. So it can be very convenient if you can provide your trusted team members with a company debit card.
This means you won’t need to manage major purchases or deal with tedious reimbursement requests.
6. Business Savings Accounts
Another important consideration is whether the business checking account has a companion or compatible savings account. Although some business checking accounts are interest-bearing, you may still have start-up capital that would be better off in a savings account.
A compatible savings account will allow you to keep your funds close at hand when they are needed. Some banks even facilitate automatic transfers. This will transfer funds from your savings account if the current account balance reaches a certain threshold. This is a great feature, as you don’t have to worry about going over or missing payments, but you can still earn a higher interest rate.
7. Additional Resources
Finally, it’s worth checking whether your new business checking account provides access to additional resources. Many banks appreciate the challenges of running a start-up business and offer help and guidance. This could be something as simple as a learning center that offers live webinars, informative guides, or access to a business banking manager.
8. Business vs. Personal Current Account
There are several good reasons to maintain a separate checking account for your business, if you have one. According to the SBA, business banking offers some personal liability protection by keeping your personal and corporate funds separate. Check writing and debit cards are features that can secure both personal and business accounts.
However, a business checking account can provide benefits that a personal checking account does not. While some personal checking accounts can be opened for as little as $1, depending on the bank or credit union, opening a checking account for a business can cost $500, $1,000 or more. Combining your personal and business operations into one checking account, if you plan to do both, can make bookkeeping difficult and tax season a nightmare.
Once you’ve launched your startup, you’re probably excited to get to work on your core business, but the right checking account can be an ally or a hindrance. The right checking account will give you the tools and services your startup needs.