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Most small business owners rarely give a thought to their checking accounts except to wonder what the current balance. However, your small business checking account can save you time or cause you grief, depending on it’s set up.
There’s no one-size-fits-all small business checking account. Each business is unique, and the checking account that’s perfect for your business may be a poor fit for the business next door. Take these five factors into consideration when you’re looking for a business checking account:
1. Location. Businesses tend to have many transactions each month, and cash-based businesses even more than most. If you’ll be running to the bank every day to get change, make deposits, or otherwise conduct business, make sure that your business bank is close to your establishment to cut down on travel time and hassle.
2. Minimum balance. Take into consideration the potential minimum balance that you’ll be required to keep in your account to avoid costly fees and penalties. Some banks allow businesses to drop to a $5,000 balance, while others require a higher base. If your business finances tend to swing widely each month, look for banks that either don’t charge fees or have very low minimum balance requirements. You may end up paying hefty fees if you can’t maintain the minimum balance each month.
3. Low fees. Ask for a complete fee schedule from each of the banks you’re considering, and compare the fees carefully. Retailers may want to choose an account with a lower fee for bounced checks, while businesses with overseas customers overseas may want be make sure that currency conversion doesn’t incur an additional fee. Your bank should provide you with this information upfront before you open a checking account.
4. Online banking services. Nearly all business banking services today provide online banking, but is it part of your business checking account? If so, what does the online banking service include? Most banks allow you to check your balance, pending transactions, and transfers, but others allow you to pay bills online and transfer money between accounts at no charge.
5. Cash deposit limits. Some banks limit the amount of cash transactions for their business checking account customers to avoid having to count and store large amounts of cash. If you run a restaurant or other retail establishment with a lot of cash-paying customers, you may wish to find a bank that accepts higher amounts of cash deposits.
Other Factors to Consider
You should also take a minute to evaluate the following concerns that may seem important on the surface, but are not be vital for small business banking customers:
Is bigger better? The bank’s name recognition may not be all that important to you. Although a “big name” bank offers the stability of a well-established name behind it, it may also offer checking services more suitable to bigger businesses. You may not need all the bells and whistles a bigger bank offers.
Are perks worth it? Some business checking accounts also offer perks such as loan consultations and considerations, credit cards, and more. Banks offer these services to small business customers as an added convenience; however, it’s fairly easy for a small business to obtain a credit card. You probably don’t need to find a bank that bundles these services into one offer for you.
Credit unions? Consider a credit union for your small business banking needs. Although you may think credit unions are only for personal accounts, many offer excellent services for their small business clients.
Business banking at your personal bank? While it may be tempting to open a business checking account at the same bank where you do your personal banking, there’s no reason why they have to be at the same bank. You should never mingle your personal funds and your business funds, even if you operate as a sole proprietor.
Review Your Business Banking Needs Frequently
Even if you’re happy with your current bank, you should still conduct an account review at least once every two or three years to make sure that your business checking account still meets your small business needs. As your business grows, you may need additional services that your current bank can’t provide, or can’t provide at a competitive rate.
Banks also change over time, and may adjust their policies and fees so that they’re no longer beneficial to your small business. Reviewing your account helps you stay up-to-date with any changes so that you’ll always have the best possible business checking account for your small business.
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