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Tips for Setting Up a Business Bank Account

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:

Shop around

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.

Comments

  1. Opata Olende says

    I just started a business and when I went in to check my bank’s business account offerings I was REALLY surprised by how much they charge compared to personal accounts.

    A great way to save for me is doing everything online or through the ABM. I find that being aware of the amount of transactions per month can be a huge cost savings over time with what my bank offers.

    Thanks for the advice.

  2. Adam Gottlieb says

    Hi Opata,

    Using online banking is definitely a big money and time saver. I think many business owners had been shying away from it because it seems less secure. The truth is though that it is not any less secure than banking by phone. People don’t realize that a phone line can be tapped, and a banks’s customer information can be hacked even if the customer never once used the Internet to conduct a transaction.

    It’s also important to keep tabs on your transactions, as you mentioned, since it will help with your cash flow management as well.

  3. says

    If you find a bank that has most of what you are looking for and reasonable fees, but lacks merchant services, it’s okay. QuickBooks for example offers merchant services that links your business online bank accounts to your QuickBooks system so you can bill and accept payments and keep your books in order all in one place.

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