Choosing the Best Business Banking Partner

Establishing a business banking account is one of the first things company owners need to do. These accounts are vital for obtaining accurate accounting data and keeping track of allowed tax deductions.

When business owners mix business banking along with individual accounts they will likely end up undergoing an IRS audit. The time spent clarifying expenses and providing adequate documentation can be grueling and may lead to late fees and penalties, so it’s best to start things off on the right foot.

There are quite a few ways to setup a business bank account. Owners can apply online or visit banks in-person. They can select a basic checking account or apply for accounts that include merchant services, direct deposit payroll, or an open line of credit.

Many banks offer accounts that can be connected to accounting software programs such as Peachtree or QuickBooks. Interconnecting accounting software with business accounts help managers conserve time while providing adequate documentation for tax records. Additionally, this method lets business owners access their account from various locations such as work, home, and even while traveling.

Fees associated with corporate checking accounts are usually quite a bit more expensive than personal bank accounts. The majority of banks charge companies a monthly service fee. Some charge fees for every transaction, while others charge if transactions exceed a set number. Fees are also assessed for overdrafts and electronic transfers.

Although it’s never a good idea to bounce a check, companies can avoid expensive fees by setting up overdraft protection. This involves connecting business checking accounts to a savings account or credit card. If overdraft occurs, banks automatically transfer a preset amount of money into the checking account.

It can be very helpful to comparison shop banks to find ones that offer the most benefits and assess the lowest fees. A trusted source for comparing banks is BankRate.com, which offers information about national and local banks.

Small business owners may find it advantageous to open accounts with local banks or credit unions. Local banks tend to be more flexible and willing to work with owners that don’t have pristine credit. This can be very helpful to owners that require working capital or want to apply for business credit cards.

On the other hand, national banks usually offer a broader range of services than local banks. National banks engage in lending practices for small business to Fortune 500 companies, along with providing a variety of credit card options. Additionally, national banks offer integrated accounting services such as invoicing systems and direct deposit payroll.

The best approach for locating the right bank is to create a list of anticipated financial needs for the short and long term. While it can be challenging to determine what services will be required in the next 5 years, most owners can figure out if they will need business loans or credit cards. Spending time assessing overall needs can help owners avoid having to switch banks at a later time.

When comparing banks it’s important to read the fine print and calculate the true costs of conducting business. Make certain to fully understand the fee structure and checking account requirements.

Some banks charge service fees if balances fall below a certain limit. Others set limits on the number of transactions that can be conducted each month and charge hefty fees if limits are exceeded. Over the course of a year, banking fees can cost owners hundreds of dollars.

Researching available options lets owners find cost-effective business banking and can help determine which bank would be the best partnership. One consideration is that local banks frequently participate in community events where local companies are promoted. Acquiring bank endorsement can be very beneficial, so when talking to banks be certain to inquire about the types of promotional activities they participate in.

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How I Setup My Business Bank Accounts

The small tasks involved in starting a new business can often times add up to become a seemingly overwhelming process when looked at in their entirety. It is important to remember that most of these tasks really are small, and looking at them as such makes things seem a lot easier. In this article I will focus on what I looked at in my situation in order to setup my business banking accounts.

Prior to setting up my banking accounts

To get to this point I had to complete a series of other small tasks in order to have everything ready for setting up my business banking accounts. This included setting up my business address, completing my limited liability company paperwork and receiving my LLC paperwork back from my state’s secretary of state office, and applying for and receiving my Federal Employer Identification Number from the IRS.

Since at this point in my business creation I do not have any real income being generated, I needed to keep all my initial expenses as low as possible. In this case it means finding a business banking structure that will not have excessive fees and preferably have no fees at all. The last thing I want right now is to spend money setting up my business on things like recurring unnecessary banking fees.

What I needed in a business banking account

I started out with a little research using the internet on what was required to setup business banking accounts. There is quite a lot of information available which can be easily found, so I will just document my steps in the decisions I made for my particular setup. There were a few things besides low monthly fees that I wanted from by business banking account.

1. A local convenient branch location

2. A national chain with many locations

3. A good on-line banking service

4. The ability to add on a multitude of business services down the road

5. Low or no recurring monthly business banking service charges

A convenient branch location

The good news is that I was able to find all of these things in my community. I needed a local convenient branch location because I do not want to have to travel all over the place to perform my banking tasks. This is a matter of time-management for me, and in the past I have chosen poorly with personal bank accounts because I thought I would do most everything on-line and not really need something close or more convenient. While I do perform most of my personal banking on-line, I still find myself wishing I had chosen a closer bank when there are times I needed to physically go to the bank. Depending on the types of deposits I will need to make, I envision myself needing to physically go to my business bank in the future much more than I need to for my personal banking needs.

A national chain with many locations

I wanted to choose a national bank with many branch offices because if I decide to personally relocate or setup a business in another location, the chances of having a local branch of the same bank is much more likely with a larger national financial institution. This would mean I would be able to keep the existing accounts with the same bank and not have the hassle of starting over with new accounts at a different bank in order to maintain the same convenience of having a close branch location.

A good on-line banking service

Having a very good on-line banking service is definitely one of the major considerations I had in choosing my bank. In today’s day and age, I want and expect very good on-line banking services including on-line bill pay, statements, account funding transfers, consolidation of all accounts into a centralized site for easy viewing, and most importantly built in functionality to download my accounts easily into financial software such as Quicken or Quickbooks.

The ability to add on a multitude of business services down the road

The ability to add additional business banking services or having a business bank which is easily scalable was also a consideration I had concerning the bank I would choose. This is an area which was not the highest priority at this time because I figured that if the bank I chose met the other qualifications then they would also have the ability to easily scale my business accounts to meet the needs of my business down the road. Merchant services and other business financial services would be some of the things I envision needing in the future.

Low or no recurring monthly business banking service charges

Last on my list would be one of the most important considerations I was having at this point early in my business setup. Low or no recurring monthly business banking service charges with the need to only maintain a low balance in my business banking accounts is a must at this time. I would not be opening my accounts with a lot of money, and I did not want what money I was depositing into my accounts to be eaten away at by service fees. I needed an account that would allow me to have a low minimum balance at the same time avoiding as many fees as I could. Many banks have accounts with no minimum balance requirements and no monthly fees for personal banking accounts, but this is usually not the case with many business banking accounts.

So how did I do?

I ended up opening a business banking account with Chase Bank. They had a convenient branch location close to my home and right across the street from my business UPS Store mailbox, which incidentally is my official business address at this point (See my article on Getting My Business Address.) They met my listed criteria for convenience, and also are a well recognized national financial institution with many branch offices throughout the nation. This means the likelihood of finding another branch close to me if I chose to relocate is much greater. They have a very rich on-line banking service that met all of my requirements for on-line banking abilities, and easily integrated with my Quicken software. They offered many business financial services which were available to me, but at this time I do not require them. It is nice to know I can get these services in the future with them. Most importantly, they were able to structure my accounts so that I do not have any monthly service fees or minimum balance requirements, NONE!

How did I avoid fees?

They had a program where I could open a business classic checking account which would normally have fees unless I maintained an account balance that was more than I would have been maintaining. I could avoid the fees by applying for a business credit card account and linking it to my business checking account. As long as I made at least one transaction a month on the business credit card account then I would not have any business checking account fees. I know the question many will be asking. What about the business credit card fees? Well I made sure the business credit card did not have any annual fees or other hidden fees also. It did not. Believe me I asked many times. There were also other benefits to having a business credit card which initially I did not place as much value on. These benefits included establishing a credit rating for my business which was independent of my personal credit history. This is important because in the future, the business may one day be able to obtain loans without personal liability of the loans by me for the business. Another benefit of having a business credit card is better protection for on-line purchases and fraud when using a credit card versus using a debit card on-line.

Making sure I have at least one transaction a month on my business credit card was easy enough. I simply set-up my internet hosting provider to use my business credit card for the monthly hosting fee of the business. This ensures that even if I choose to use my checking account checks or debit card, which was also free of fees, I will always have at least one charge on the credit card to meet the bank’s requirements for waving all of my business accounts’ service charges. Not a bad deal in my opinion.

What paperwork did I need to setup my accounts?

First I have to say the customer service for setting up my business banking accounts was top notch! I just walked in to the branch office without any appointment and a representative from the business banking department met with me immediately. I made it clear from the beginning that I was small-time when it came to my business at this point. They still treated me like I was a larger business. They took the time to explain everything and answered my many questions. I was approved on the spot for a business credit card with a very nice limit. I plan to never even carry a balance on the card, but it was nice to see I qualified for a respectable line of business credit.

All I needed to set-up my accounts were my personal identification, the employer identification number I received from the IRS, the certificate of filing from the Office of the Secretary of State from my state, and my LLC operating agreement. All of these documents, except for the personal identification of course, were part of the LLC package I received when I filed for my LLC using LegalZoom.com. Everything was in order and I had everything with me to complete the task without having to make any additional trips to the bank for further documentation.

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How to Get the Best Small Business Bank Account for Your Company

There are several factors to consider before choosing a business bank account. Company size, location, and business plan are all important elements that affect the type of business account an owner should choose; these factors should be taken under serious advisement while making such an important business decision. There are several things that a business account should entail and the best business bank accounts encompass all of the following attributes.

Define and Explore Your Needs

Before choosing a financial institution, consider the reasons you need a business bank account in the first place. If you are interested in specialized services, research banks in your region that offers these services. Be prepared to perform online and in-person investigations; often times, online information only covers surface information and cannot answer pertinent questions you may have. Never assume something that isn’t clearly stated; don’t be afraid to ask for concrete answers to your business banking questions. Credible financial institutions won’t have any problems calming your nerves and satisfying your financial inquiries.

If you hadn’t considered this before, search for a bank with a financial adviser. Many financial institutions offer these services as an added perk; benefits can include aide and guidance in future investments and professional help to manage cash flow.

Compare Features to Find the Best Small Business Bank Account

Once you have firmly established what you are searching for in a bank, comparing and contrasting the financial institutions in your area is a relatively simple task. Don’t forget that once you’ve narrowed down your options, you can always call to request more specific information or to schedule a meeting to review information and address particular concerns you may still have.

Keep in mind the importance of availability and account services. A bank that offers great incentives but lacks a local branch doesn’t do much good if you prefer a face-to-face interaction. On the other hand, nationwide banks that offer online banking but lack your required account services will likewise do you no good. Determine the type of banking system you will prefer and find one that suits your small business account needs.

As you draw closer to choosing a financial institution, remember to focus on fees and service charges. In most banks, fees for business accounts are significantly higher than those for private accounts, even going so far as to charge businesses for online banking services but not charging individuals. Beware that universal truths pertaining to personal bank accounts do not hold true in the business account realm.

Bank Size Does Matter

At some point in the life of a small business, it is highly probable that the company will need to borrow money. Since the decline in the market, many banks are making it more and more difficult to get credit. Surprisingly, many small business owners have turned to community and small banks to get the loans they require. Small banks are more likely than world institutions to issue loans to indigenous businesses because it strengthens the local economy and supports the community. These minor institutions tend to meet a small business’s financial needs on a more personal field and provide a level of support that “outside” banks cannot.

Once you have evaluated each of these steps and determined what services and values best fit your financial needs, it is as simple as a visit or the click of a mouse to get the best small business bank account for your company.

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The Perks of Having Business Bank Accounts

Start-up businesses would often forego opening business bank accounts and opt to use their personal bank accounts instead. Why is this so? For one, opening a separate account may mean incurring additional expenses. Another thing is that new entrepreneurs would want to reduce risks andso they want to establish their business names first before considering account options. Some are also hesitant to open business bank accounts because they think that it would be too much of a hassle to deal with the legalities associated with opening a corporate account. But should you follow in their footsteps?

Advantages of Opening a Company Bank Accounts

There are in fact a lot of advantages of having business bank accounts. Here are some of them:

It organises your finances and makes it easier for you to check your income and expenditure for the year. If you don’t have a business account, it will prove to be more difficult and time-consuming since you will have to separate and distinguish the personal transactions from that of the business banking transactions.

Another advantage of having business bank accounts is that it gives your business a professional profile especially when it comes to transactions with customers. This also shows that you are serious and focus-oriented on the ends of the business. And besides, a guaranteed business account will also help speed up the day-to-day financial transactions that you have.

The edge of having a separate business bank account would be transparency in financial transactions and in declaration of income. The flow of income and expenses should be clear. This also further shows tax authorities that you are a responsible business owner because you uphold transparency in business transactions and can pay your taxes in a timely manner.

Having a company or business bank account will actually get you more perks than nuisance. Some banking institutions for example would offer free business banking for a year for start-up businesses. Some banks could also offer business accounting software to be used on their day-to-day business operations on finances.

Finally, it will be easier for you to apply for business loans if you have an active business bank account.

Online Banking at Its Peak

A great thing about the technological advancements available today is that banking can already be done online. Online banking has become a growing necessity for business people who are always on the go, thereby making financial transactions very easy and convenient, as everything is done on a virtual landscape and can be completed quickly. Online banking also provides you easy access to your business data and income, and helps you keep track of your expenses. The element of speedy transactions is magnified online as well because your borganisation now runs on your own time and not on banking hours. You can easily pay bills and receive funds in a secure and fast manner, no matter what time of the day it is. So, with common banking concerns at bay, the company can now focus more on other important matters like generating sales.

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A Business Bank Account Should Make Business Sense

Business bank accounts are designed to support businesses and there is a wide range of business bank accounts available. It remains important to speak to a consultant and ensure you get the features you need for your specific business.

A business bank account can have multiple card holders. The debit cards can be held by non-authorized signatories or by primary cardholders who are authorized signatories to the account. Withdrawal limits are per card per calendar day and are restricted to the maximum card limit and apply to purchases you make and cash withdrawals when you enter a PIN. You can increase the limit at your bank. Most ATM machines offer a maximum cash amount per withdrawal.

Internet banking and mobile phone banking enables you to manage your money. If you travel or have to be out of the office, you can still obtain easy access to your bank account. These accounts typically provide effective ways to manage finances. Internet banking can save you time and can also simplify your accounting process. You can view the account balance, make payments and transfer money from anywhere at any time.

Business bank accounts offer flexibility, such as no minimum monthly balance, cheque facilities, cheque and deposit books, Internet banking, telephone banking, and ATM cash withdrawals and over the counter services. You can enjoy unlimited electronic transactions and depending on your financial institution, obtain an automatic overdraft limit.

Financial institutions have to cover costs involved for banking services and consumers are therefore asked to contribute towards the costs of various transactions. Fees are only charged when you make use of a particular service or when you failed to meet a commitment you made.

Cheque accounts offer overdraft facilities. An overdraft facility is an agreement with the bank which allows an account holder to use funds exceeding the amount on deposit. The banks usually charge an overdraft fee for accessing the overdraft facility.

In order to apply for a bank account in Australia, you will need an Australian Business Number, Australian Company Number or an Australian Business Number and the Certificate of Registration of Company, or Certificate of Incorporation, or certificate of Registration of Business Name or a letter from delegated authority for opening an account. The application also requires the name of the proprietor or director and the names, dates of birth and addresses of all account signatories. The lender will conduct a search of the business’s name to verify the details.

Business bank accounts can have multiple card holders. The cards can be held by non-authorized signatories or by primary cardholders who are authorized signatories to the account. Withdrawal limits are per card per calendar day and are restricted to the maximum daily card limit and apply to purchases you make and cash withdrawals when you enter a PIN.

Bank accounts typically provide effective ways to manage finances. Internet banking can save you time and can also simplify your accounting process. You can view the account balance, make payments and transfer money from anywhere at any time. The Australian banking system allows you to pay wages, debts and bills in an efficient manner.

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