Running a successful business takes a lot of skills, patience, hard work, and dedication. Although opening a business checking account may seem like a small step for your business, finding the right bank account can make a big impact that can benefit you for years to come.
The U.S. Small Business Administration urges startups to open a business checking account promptly after receiving an employee identification number. The Internal Revenue Service requires incorporated organizations to possess a business bank account regardless of whether it’s structured as a sole proprietorship, partnership, or corporation.
Even though the IRS doesn’t task unincorporated entities with opening a bank account, having a business checking account opens doors to business loans, business lines of credit, and other perks. In addition to finding the best checking account for your business, finding the right financial institution to do business with can make a significant difference when it comes to supporting and financing your business needs now or down the road.
Having an online presence was once a crucial marketing point for financial institutions. These days, a digital platform is considered standard operating practice. Although there are differences among online banking methods and conveniences, brick-and-mortar locations have remained an important offering for business owners.
Part of the physical location issue stems from having an ATM network where a company does business. In-network ATM usage typically doesn’t usually result in paying a fee to make withdrawals or check account balances. Out-of-network cash points generally add fees to withdrawals and other transactions. If you are looking for Free ATMs, check what options your local community bank offers. In addition to ATMs, more physical locations often means more night drop box access for business owners closing up shop after a lobby would typically close.
Aside from wasting the business’s hard-earned money, every time cash is needed and extended deposit options, there’s a sense of familiarity that comes with doing business at a trusted community lender that frequently is missed at larger financial institutions. Everyday people prefer to know who they are doing business with, and that includes members of your banking team. Choosing a community-based bank provides access to a lending professional that understands the local market and is invested in your business because it is part of their community. They succeed when your business succeeds.
The fees associated with one institution’s business checking account, and another’s can be worlds apart. Financial institutions typically add these costs to offset expenses such as buildings, staff members, materials, internet services, and general overhead. Fees may be added to wire transfers, overdrafts, account processing, and monthly maintenance, among others.
While they are not necessarily unreasonable in many cases, business owners can find a community bank willing to waive or offset these and other charges. For example, processing fees can be mitigated by offering unlimited transactions, earnings credits, or a just straight-up free business checking account with no minimum balance requirements. With some due diligence, entrepreneurs can avoid unnecessary fees and find the best account for their business.
It’s important to keep in mind that financial institutions are a type of company that must generate revenue. In order to offer interest on business checking or savings accounts, a certain balance threshold is generally needed.
That being said, small businesses may routinely draw funds down during different points of the year. And, owners may decide to pull out cash and invest in new equipment, leaving balances low. To avoid paying fees, selecting a business bank account that does not require a certain balance may be prudent. Before choosing a business checking account, know the expectations and fees.
While online banking options may be the standard in personal banking, what can be done digitally with a business checking account is not. Items such as “bill pay” features in mobile apps are not as prevalent as many would anticipate. The same holds true of remote check deposit capabilities.
It’s also critical to understand the importance of separating personal and business accounts. When a business checking account cannot perform tasks online, owners sometimes use their personal resources. This misstep can result in lost business deductions and breaks down the liability wall between what is considered a business and personal asset. That’s why it’s essential to weigh the digital conveniences of each business account and determine how they sync with your needs.
One of the key benefits of a business checking account involves merchant services. While considered a broad term that encompasses a variety of digital conveniences, a reliable community bank offers a link between credit and debit card processing and money flowing into the account.
To accomplish this business perk, hardware and software must be coordinated with the institution. Point-of-sale hardware or a card reader is typically used to conduct sales. The revenue is electronically transferred to the account, making bookkeeping and cash flow seamless.
Cost-effective merchant services are not necessarily a standard benefit of a business checking account. And, keep in mind, some financial institutions charge a premium for this service. If you are considering opening a business checking account, ask whether merchant services are available and at what cost.
If you are considering opening a business checking account, Middlesex Federal offers a wide range of cost-effective options with excellent benefits. For more information please contact us today or stop by one of our convenient branch locations.