If you own a small business, are self-employed, or even do some contracting work on the side, opening a business bank account is a smart move. As we’ll see below, there are a lot of great benefits of separating your business transactions from your personal ones. However, you need to be careful when choosing a business banking account because they’re not all created equal.
The good news is that choosing a business banking account isn’t as hard as it may seem. Keep reading to learn how to choose one and some of the benefits of having a business bank account.
How does a business bank account differ from a personal account?
As its name suggests, a business bank account is a bank account intended solely for your business. After setting up your business bank account, you’re able to collect payments, pay employees, buy supplies, and much more—all without touching your personal finances.
Many business bank accounts also come with a business savings account. Having a business savings account lets business owners separate savings from everyday capital. This is handy if you’re planning on making a big purchase or investment down the road.
What are the benefits of opening a business bank account?
If you operate your business under a Doing Business As (DBA) or an LLC or corporation, you need a business bank account. Even if it’s not required by law, here are a couple benefits of a business account:
- Financial protection: A business bank account provides financial protection for you and your company. For example, your personal assets won’t be in jeopardy if you’re not able to pay your business debts. Additionally, your business credit score won’t be impacted if you have personal financial issues.
- Better organization of expenses: Tracking your expenses and monitoring your spending is hard enough for the average person, so imagine how difficult it can be if you’re trying to manage your money for a small business. It’s much easier to stay financially organized if you set up a dedicated business bank account.
- Fewer headaches during tax season: Most business owners do everything they can at tax time to get as many deductions as possible, but some of these financial moves can trigger an audit. If you take business deductions through a business checking account instead of a personal one, you’re much less likely to land in hot water with the IRS.
- Professionalism: It’s all about professionalism when it comes to working with customers. One of the best ways to maintain a professional appearance is having customers make payments to your business bank account instead of your personal one.
Steps for choosing a business bank account
Having a business bank account is clearly a must for most business owners. But the last thing you want is to open up an account with a bank that’s the wrong fit for you and your business. Here are a few things to look for when choosing a business bank account:
- Account features and services: Start by checking out the features and services the bank offers for business checking accounts. A few of the must-haves include mobile banking access, bill payment services, wire transfer services, and debit card access. Other things to look for include cash flow management services, business retirement account options, and money market accounts.
- Interest rates: Having an interest-bearing business checking or savings account is always a plus because it helps your money grow by simply sitting in the bank. Look for a bank that has the best interest rate when choosing a business banking account.
- Service fees: Maintenance fees, minimum balance fees, ATM surcharges, and overdraft fees are just a few of the fees that banks can hit customers with. These fees apply to both business and personal accounts. To avoid frustrating penalties, find a bank that imposes as few of these additional fees as possible.
- Branch and ATM access: Most of today’s banking can be done online or even through a smartphone app. When choosing a business bank, ensure it fits your needs for ATM or branch access. Digital banks like NorthOne offer ATM cash withdrawal and deposit access, as well as mobile check deposit, which replaces the need for a physical branch. NorthOne also provides ATM access across the country through a robust ATM network.
- Transaction limits: Hopefully, you’ll be using your business banking account a lot—this means your company is thriving! Be careful, though, because some banks have daily, weekly, and monthly transaction limits. Look for a bank whose transaction limits fit your business’s needs.
- Ease of integration: You may be able to make your life even easier by syncing your business bank account with your current payroll program and tax preparation software. Check to see if the bank in question can sync with the financial software you use every day.
How to open a business bank account
Now that you know why it’s a good idea to open a business bank account and the steps for choosing a business banking account, it’s time to open one of your own.
Just like with a personal banking account, you’ll need quite a few documents when you’re opening up your business account. Depending on how your business is structured, you’ll need your Social Security number, photo ID, Employer Identification Number (EIN), a Doing Business As certificate, articles of incorporation, and your business license.
Your next step is making a deposit after you’ve submitted these documents and filled out all the necessary paperwork. Your bank may require a minimum initial deposit, so be sure to read the fine print so you’re able to meet the deposit criteria on day one.
Open your NorthOne account today
Setting your business up for success starts with choosing a business banking account. If you’re ready to take your banking to the next level, make sure you open an account with NorthOne. Our services make managing your business’s money easier than ever, so you can spend more time focusing on your company instead of worrying about finances.