Whether you’re just starting out or looking to expand, there’s much to consider when managing a business. One of the items that should be on your priority list is determining which business bank account is best for your company.
The type of business account you have and where you choose to bank can significantly impact your business’ finances. Here to guide us through managing business finances is Centris Federal Credit Union’s senior vice president of business banking, Kevin Svec.
Why the Right Business Account Matters
It’s not just about opening a business banking account and calling the process finished; it’s about choosing the right one. Business bank accounts are not one-size-fits-all. Svec notes that “business bank accounts are often more granular and offer more specific features than some consumer accounts.” He emphasizes that “it is common for business bank accounts to differ based on business type, balance, activity, and more to assess fees and ensure the account works for certain business types.” Finding the right fit for your business is crucial to the overall success of your business finances, including improving cash flow management and building a foundation for growth.
Separate Your Personal & Business Finances
Separating business and personal finances is an essential start to your business finances. Svec explains that “when you separate the two, you’ll find that bookkeeping, accounting, and tax preparation can become much easier, and your records are clean and compliant for tax reporting. Plus, keeping track of everyday business expenses and revenues may be easier to manage.”
Improve Cash Flow Management
By getting the right business checking account and other services, you’ll better understand your business’s cash flow and spending. Svec also says having separate business accounts “can help support accurate forecasting and financial planning.”
Build a Foundation for Long-Term Growth
Many of us probably opened our first checking accounts as pre-teens or teenagers, which allowed us to grow with that account over time. So, why not do the same with your business?
Establishing a business account is a great way to ensure your business has a foundation for long-term growth. “Creating that account early helps make the process of building financial history easier and may help with applying for business loan solutions and credit,” says Svec.
Plus, having a dedicated account for your business helps prepare it for future growth by potentially making it easier to establish a relationship with a business banking partner, like Svec and his team at Centris.
Key Features to Look for in a Business Bank Account
So, how do you determine which business bank account is best? Svec points out that “it depends on your business and what you’re looking for. For example, you might be seeking a business bank account with low or no monthly fees, one that accrues interest, or one tailored for a specific type of business.”
Low or No Monthly Fees
When starting a business banking journey, many business owners prioritize finding a low-fee business checking account or one with no monthly fees, which can help keep operational costs low. However, if you find an account that’s right for your business but comes with some fees, consider the long-term benefits that account may offer, especially if it’s with a bank or credit union with which you have a strong relationship.
Online & Mobile Banking Tools
A beneficial feature for business owners is the availability of online and mobile banking tools. “Not only can you manage your account from anywhere, but you can often make mobile check deposits, pay bills, and track transactions,” explains Svec. Utilizing these online business banking tools can significantly enhance your ability to streamline daily business operations.
Interest-Bearing Account Options
If you plan to maintain a larger balance in your business bank account, you may want to consider interest-bearing business accounts. These can range from an interest-bearing business checking account to a money market, savings, or certificate.
Types of Business Bank Accounts
“The best business bank accounts are the accounts that can help your business grow and thrive,” suggests Svec. “Depending on your business size, structure, and financial goals, multiple types of accounts could benefit your business.”
Business Checking Accounts
What’s number one on Svec’s list of bank accounts businesses should have? A checking account for business. These accounts can serve as the foundation for your business finances, allowing you to track everyday transactions and bill payments. Plus, most banks and credit unions offer debit cards, check-writing abilities, and direct deposit with these accounts.
Svec notes that some business checking accounts are “tiered based on balance or transaction volume. So, the more money you may have as an average daily balance or how many transactions your business completes in one day may affect the account’s fee structure, dividends, etc. Be sure to talk with your business banker to find the best business checking account for your needs.”
Business Savings Accounts
Should you also separate your personal and business savings? Svec says, “Yes” He explains, “when you have a separate business savings account, you can distinguish how much you have saved for personal use from what you have set aside for your business.” A business savings account allows money saved for business taxes, emergencies, and expansion to earn interest while remaining liquid.
Business Money Market Accounts
A money market account is an excellent option for companies that can maintain a higher average balance and wish to earn dividends on their funds. The dividend rates on money market accounts are often higher than those of business checking and savings accounts. It’s important to note that these accounts may come with withdrawal limits or minimum balance requirements.
“These accounts,” says Svec, “combine the convenience of checking with higher dividend earnings. To avoid fees, businesses often must meet a higher minimum balance and potentially other requirements.”
Merchant Services & Payment Solutions
Svec also suggests checking with your commercial banker to see if they offer business banking services and payment solutions. These services, which range from merchant processing to employee payroll services, can often be bundled with business checking accounts.
Tips for Choosing the Right Place for Your Business Banking
Finding the right accounts for your business is important but so is finding the right place to have those accounts. From local banks and credit unions to national financial institutions, where you open your business bank accounts will depend on your wants, goals, and long-term banking needs. Svec encourages business owners to “explore different types of financial institutions. Evaluate their fees, accessibility, digital tools, and customer service to determine which may be best for you.”
Compare Fees, Features, and Flexibility
When visiting different banks and credit unions, an important thing to compare is their fees, features, and flexibility. “Try to seek out a financial institution that will be transparent about their fees and explain them in easy-to-understand terms,” says Svec. “Ask them questions about their account and online banking features to ensure it aligns with your needs.”
Look for Local Support and Resources
What kind of support are you looking to receive from your financial institution? If it’s local support and resources, you may want to consider a local bank or credit union. “Having a local professional who understands local business needs and who can provide personalized advice is a benefit that many may not recognize,” explains Svec. “When you bank locally, you’re not just opening an account. You’re gaining access to in-person support and expertise that may not be available through larger banks.”
Consider Long-Term Financial Partnerships
Before opening a business bank account, especially one like a checking and savings account, ensure that as your business grows, your accounts with this institution can, too! Svec advises to “ask if they offer services you may want and need in the future, like equipment loans, real estate loans, or lines of credit. You can also ask if they offer financial planning for your business or educational resources for you and your employees.”
At Centris Federal Credit Union, our business banking experts help empower your enterprise through checking accounts, commercial loans, merchant services, and more. Call our team at (402) 758-6423 or email us at businessbanking@centrisfcu.org to get started!
Federally Insured by NCUA.
