Choosing the Right Bank Account for Your Business

May 23, 2024 Leah Driver

Woman looking at checking account options for her business

As a small business owner, managing your finances effectively is key to your success. Juggling daily operational expenses, expansion costs, and other financial responsibilities can be challenging. Selecting the best bank account for your small business involves weighing various factors. Here’s a guide to help you navigate the intricacies of small business banking.

Automated Clearing House (ACH) Access

A good business account should provide user-friendly ACH access for electronic fund transfers. This feature enables efficient and convenient loan payments, B2B transactions, recurring customer payments, bill payments, and payroll processing.

Payroll Services

Some banks offer integrated payroll services, streamlining bookkeeping and providing an alternative to third-party payroll providers. However, be aware of any fees or conditions tied to these services.

Customer Payment Methods

Accommodating customer payments is crucial. Accepting payment cards (credit or debit) or mobile payment apps can be more convenient for your customers but can come with fees. It’s essential to scrutinize fees and funds availability terms, then compare different payment processing services to find the best deal for your business.

Online and In-Person Banking

Banking options that work for you are essential. Online banking and mobile apps allow you to make transactions, transfers, and manage your account(s) at your convenience. For businesses dealing with large amounts of cash or frequent deposits, convenient office locations are important.

Fees and Allowances

Carefully review fees associated with business accounts, which might include monthly service charges, minimum balance requirements, and transaction allowances for deposits, withdrawals, and wire transfers. As a general rule, you should opt for accounts with minimal fees and generous transaction allowances, but discuss your specific business needs with your banker to be sure you’re choosing the right account for all of your needs, not just the account with the lowest fees.

Interest Rates

Interest-bearing accounts can help grow your funds by offering competitive interest rates. Treasury management services, like sweep accounts, can also help you maximize the interest you earn. Compare interest rates across banks and account types to maximize your savings potential.

Separating Personal and Business Accounts

Keeping your personal and business accounts separate is not only highly recommended, but it also offers several benefits, including:

  • Protection for your personal assets – separate accounts limit your personal liability for business debts
  • Simplified record keeping – the IRS recommends separate accounts to simplify recordkeeping, especially during tax season
  • Payment flexibility – business accounts allow your customers to pay with debit/credit cards or checks made out to your business, which is more professional and can be more convenient
  • FDIC Insurance – deposits for corporations, partnerships, or unincorporated associations are insured up to $250,000, separate from personal accounts which are also FDIC insured

Choosing the right operating account is essential for building a strong financial foundation for your company. By considering factors like banking services, fees, account separation, and payment services, you can make informed decisions that align with your operational needs and support your financial goals.

Questions? Talk with a CSB Banker who will take the time to discuss your needs and help you make an informed decision that’s best for you.

The views, information, or opinions expressed in this article are solely those of the author and do not necessarily represent the views of Citizens State Bank and its affiliates, and Citizens State Bank is not responsible for and does not verify the accuracy of any information contained in this article or items hyperlinked within. This is for informational purposes and is no way intended to provide legal advice.

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