One of the first things you’ll be doing when you start a new business is choosing a business bank account. (Remember! Keep your personal and business finances separate!) The thing is, though, at first glance all business bank accounts look roughly the same. But alas, they’re not. What you need to do is find the right type of account for your needs.
Checking or Savings?
Choosing a business bank account can start with one simple question: checking or savings? A checking account will offer you the most flexibility in terms of ability to pay bills and use a debit card for business expenses. Checking accounts almost always come without interest earning power. That means your business’ money just sits there. But if you’re starting out, that’s sort of OK. Any amount of interest a simple savings account might afford you will be very, very small and likely not even worth it.
As you know from your personal finances, banking is tech heavy these days. (Just ask yourself: when was the last time you walked into a bank branch?) So from a business bank account perspective, you’ll want to evaluate the technology each bank offers and match those offerings up against your needs and work/life style. Does the bank offer online banking? Can you send checks and pay bills online? Does the bank have a mobile app for business accounts? Can you do mobile deposit from those apps? And if you can do mobile deposit, are there daily and monthly amount limits? When choosing a business bank account, you’ll also want to know if the bank will sync with your accounting software to make bank reconciliation easier and less manual. (Hint: Kashoo syncs with thousands of banks.)
If having access to a physical branch is important to your business, geography should be a consideration. Is there a branch near your office or home? Do expect to travel frequently but still have regular in-branch banking needs? How does your bank handle international transactions? These are all question you need to ask when choosing a business bank account if geography is an important criteria to you and your business.
While you’re choosing a business bank account for your immediate needs (i.e., a place to put your revenue!), you’ll also want to think about what a given bank has to offer your business in the future. Do they have lines of credit or business-friendly loans? Can they help you set up things like a SEP-IRA or payroll? A good business bank will grow with you, so think beyond what your business needs right now.
Fees and Penalties
When choosing a business bank account (or any bank account, for that matter), you want to have a firm understanding of the fee and penalty structure. Many checking accounts have monthly deposit or amount minimums that may seem insignificant, but can sneak up on you—especially for the business owner just starting out. Ask a bank representative about an accounts fee and penalty structure and then ask again.
So when you’re choosing a business bank account, make sure you pick one that meets not just your business’ needs, but your own needs as well.
As always, this isn’t financial or legal advice!