Setting up a bank account for your business is a fundamental component of operations. Though your banking services run in the background, if they’re glitchy they can cost unnecessary money and grief.
If you own a small business, realize there are many moves you can make to ensure that your business’ banking services not only run smoothly, but do so in a way that saves you time and money.
Therefore, away we go with time and money-saving tips for opening a business bank account:
Some small business owners make the gaffe of using the same bank for their personal bank accounts for their business. This may sound good in theory, especially if you are receiving decent to good customer service. But, banks sometimes separate their services into different departments, each with their own goals and criteria for doing business. The result is that you may end up with a business account that offers neither the best features, nor the best rates, topped with dreary customer service, even if you’re enjoying great service as a consumer.
It almost always pays to shop around to secure the best bank for your business. Below, I’ll outline some of the features to look. If, however, you have already opened an account and you later find that it’s not a good fit, don’t sweat it.
Mind the Fees
When it comes to business bank accounts, the fee schedule casts a towering schedule. All those monthly and transaction-based fees can add up- even if they don’t look so scary at first glance. Here are the fees to be on the lookout for, considering them according to how your business operates:
- Monthly fees- You’re most likely to run into these with checking accounts. The way to waive them is to stay within specified limits, including maintaining a certain balance. Thus, be sure to maintain a cash cushion to avoid these fees.
- Transaction fees- Some banks charge transaction fees after the number of free transactions has been passed. A transaction includes all the standard movement of funds sent and received through an account, such as check payments and receipts as well as electronic transfers. If you enact hundreds of transactions per month, make this factor weigh heavily.
- Cash deposit fees- Many banks limit the amount of coins and notes that can be deposited for free each month. Typically a fee of $0.10 – $0.50 will be incurred for every $100 over the limit. This can seem like an afterthought or insignificant detail, yet can be a serious hazard to a retail business that accepts cash.
Willingness to Extend Credit
Not all banks are equal in terms of extending credit and loans to small businesses. If you anticipate needing bank credit, such as a credit card or overdraft protection, investigate the bank’s history and attitude toward its small business clients. This is especially true if your business is relatively new, seasonal, or in a “high risk” sector, such as retail. Many financial experts suggest considering community banks and credit unions, which are often to be more small-business friendly.
As a side note, if you’re running a non-incorporated partnership, you could choose to open a joint business account with your partner. These joint business accounts work like joint bank accounts. It will allow you to pool resources and credit profiles, making your account more attractive to the bank and thus helping your business to secure financing.
Online and Mobile Banking
Travel time to and from the bank leads to lost time and productivity. That’s just one reason for small businesses to take advantage of online and–especially–mobile banking. These include e-payments and mobile check deposits. This spring, RemoteDepositCapture.com conducted a study showing that 63% of surveyed banks offer mobile check deposits–taking a picture of a check and depositing this into your account instead of the actual check. Perhaps more significantly, another 33% plan to begin offering it in the next six months, leaving almost no one holding out.
Often, the larger banks have the best online and mobile banking programs, but whether this point will be a deciding factor depends on how how vital the more advanced mobile features are to your business.
Other Banking Services
In some cases, you may want to open an account with a bank that specializes in advanced financial services, such as invoice finance, asset finance, or advanced merchant services.
Ultimately, it’s key to open your business bank account with a financial institution that will work with your business and perhaps even improve operations.