Things to Consider When Choosing a Bank for Business Account
Business bank accounts help you manage your business finances in a professional manner and separate those funds from your personal finances. Opening a business bank account requires more effort than opening a personal account. There are documents to gather, names to be determined and licenses to get in order. Learn why you should have a business bank account and what you need to do to open one.
Business owners have many banking options, and every bank offers something a little different. Take your time perusing the various options until you find the right bank for your business.
“Always shop around,” said Mike Swigunski, founder and CEO of Global Career. “Banks are as keen to gain new customers as they are to retain current ones, so use this to your advantage to get better deals.”
Here’s what to consider (and ask about) as you evaluate different banks:
Every bank has different fee structures and features. Business accounts typically have higher fees and minimum balance requirements than personal accounts.
Tracy Odell, vice president of content at FinanceBuzz, recommends asking whether the bank offers any bonuses.
“Sometimes banks offer bonuses for opening a business account with them,” she said. “For example, a bank might offer $300 if you open an account and maintain a certain minimum balance. These offers can be a great way to earn a little extra revenue, but keep in mind that these bonuses are taxable. Don’t be surprised if you get a 1099 for the bonus next tax season.”
Account maintenance requirements
Often, business bank accounts have requirements that you must meet; if you don’t, you can be charged fees. For instance, it’s common for banks to require you to maintain a certain balance – but this minimum amount varies from bank to bank – and it may be a daily minimum or a monthly minimum. If you have multiple accounts, the bank may count all of your accounts toward a combined minimum amount, or they may look at each account separately.
In lieu of maintaining a certain minimum balance, some banks, with their business checking accounts, won’t charge you the fee if you spend a certain minimum on a debit or credit card tied to your account, or if you use one of the bank’s other services.
Carefully consider which account features are must-haves when you’re comparing banks. For instance, do you need a business bank account that includes detailed analytics? Do you want a mobile app that allows you to digitally deposit checks? Do you need a business debit card? Would it be useful to receive alerts when your balance is nearing your minimum?
Key takeaway: When looking for a bank for your business account, take your time researching the different requirements, features, fees and sign-up bonuses.
How to open a business bank account by company type
According to Grant Aldrich, founder and CEO of OnlineDegree.com, opening a business bank account follows the same process regardless of your business type, except for sole proprietorships, as opening a personal savings or checking account.
“If you’re a sole proprietor, you need to bring your Social Security card instead of your EIN,” Aldrich said.
Sole proprietors still need to bring their business license, DBA certificate and personal identification documents.
Key takeaway: Most banks do not have a separate process for each business type – except for sole proprietors – who will use their Social Security number instead of an employer identification number.