So you want to open a business account, but you are unsure about the process. This is understandable, as it may seem simple to select a bank and set up your finances.
However, the underlying details can be overwhelming when it comes to finding the best fit for your business. To address some of these burning questions, we have compiled the top 15 questions to ask when opening a business bank account.
Whenever you’re ready, let’s get started!
1. Should You Choose a Traditional Bank or Neobank?
When opening a business bank account, one of the first decisions you’ll face is choosing between a traditional bank or a neobank.
Traditional banks have physical branches, offering familiarity and a wide range of services beyond basic account management. They provide specialized business services like merchant services, payroll management, and lending.
Neobanks, on the other hand, are purely digital banks that operate online and focus on convenience and innovative features. They offer a streamlined, user-friendly online banking experience that can be accessed anytime, anywhere.
The best way to determine which one to choose is to weigh the needs of your business. If you have a brick-and-mortar business, it may make sense to choose a traditional bank if you need to go to a physical location. Alternatively, if you have an online business, a neobank is a convenient option to manage your finances from any location.
2. What Competitive Banking Services Do They Offer?
Look for services that go beyond the basics of account management.
Consider features such as:
- Merchant services for smooth payment processing,
- Payroll management tools for streamlined employee payments,
- Remote check deposit for convenience, or
- Integration with accounting software for seamless bookkeeping.
Additionally, some banks provide industry-specific services tailored to the needs of businesses in sectors like healthcare and real estate.
3. What Are the Minimum Balance Requirements?
Different types of business bank accounts often have different minimum balance requirements. These requirements refer to the minimum amount you must keep in your account to avoid fees or penalties. And each type of account may have its threshold. Therefore, you should carefully review these requirements to ensure they are in line with your business’s cash flow and financial capabilities.
4. What’s the Interest Rate?
Banks determine their interest rates based on various factors, including market conditions, the Federal Reserve’s benchmark interest rate, and their own lending and investment activities.
The interest rate is typically calculated on an annual basis Annual Percentage Yield (APY) and can be compounded daily, monthly, or annually. Keep in mind that interest rates can fluctuate over time, and banks may offer promotional rates for a limited period.
Additionally, different account types may come with different interest rate structures, and the interest rate may also be influenced by the amount of money you have in the account.
5. What’s the Fee Schedule?
Banks provide fee schedules that detail the charges related to different services and transactions, helping you understand the cost implications of using their services.
Here are some common fees which may be levied for the upkeep of your account.
- ATM withdrawal fees: Incurred when using ATMs outside the bank’s network.
- Overdraft fees: Apply if you spend more than the available balance in your account.
- Wire transfer fees: Charged for transferring funds electronically.
- Transaction fees: May be applicable for activities like depositing or withdrawing cash.
6. What Are the Minimum Transaction Amounts and Maximum Transfers?
The minimum transaction amounts and maximum transfer limits can vary depending on the bank and account type. Here are a couple of examples:
- Minimum transaction amount: Some banks may have a minimum deposit requirement of $100, meaning that any deposit below this threshold would not be accepted. Similarly, there could be a minimum withdrawal amount of $20, indicating that you cannot withdraw an amount lower than that.
- Maximum transfer limit: Banks may impose daily transfer limits, such as a maximum of $5,000 per day for online transfers or a monthly limit of $25,000 for outgoing wire transfers. These limits ensure security and help prevent unauthorized transactions.
7. Where Are the Bank’s Branches?
When opening a business bank account, branches can be found in various locations to serve the needs of customers.
In urban areas, you’ll often find branches in busy city centers catering to the businesses and professionals in the vicinity. These branches are easily accessible and may offer extended operating hours to accommodate busy schedules.
In suburban areas, banks establish branches to provide convenience to businesses and residents outside city centers. These branches serve the local community and offer a range of services tailored to their needs.
In more rural regions, banks have branches in towns or smaller communities, ensuring that businesses and residents have access to banking services without the need for long-distance travel.
Conversely, with the rise of online banking, some banks operate exclusively through digital platforms — allowing customers to manage their accounts and conduct transactions online without the need for physical branches.
8. Is Online Banking Available?
In today’s digital world, online banking has become a popular choice and continues to improve its efficiency and usability. Online banking offers several advantages for business accounts.
You can easily check balances, transfer funds, and pay bills remotely. It also enhances security with advanced measures like encryption and multifactor authentication.
Overall, online banking streamlines financial management for businesses and offers flexibility in handling banking tasks from any location.
9. Does the Bank Enable Better Bookkeeping, Cash Flow Management, And Collaboration?
Many banks provide business-centric tools and features that can significantly enhance bookkeeping practices, cash flow control, and teamwork. These benefits may encompass compatibility with accounting software, detailed reporting functionality, predictive tools for cash flow, digital tracking of expenses, and shared account accessibility.
10. Does the Account Offer Rewards?
Certain business accounts come with enticing rewards programs that offer incentives based on your banking activity. These rewards can range from cash back on certain transactions that help reduce business expenses to earning points or miles that can be redeemed for flights, hotel stays, or merchandise.
Banks may also offer discounts on business-specific expenses such as office supplies or software subscriptions. Therefore, when selecting a bank account, consider the relevance and potential value of rewards — taking into account your business spending habits.
11. Do You Need Quick Lending?
Some banks offer efficient lending solutions, such as working capital loans or lines of credit, with streamlined documentation and fast approval processes. Evaluating the bank’s ability to provide quick lending can be crucial for maintaining financial flexibility and seizing profitable business opportunities.
Although you should take precautionary measures when it comes to taking out loans, many banks also offer flexible payment plans and accessibility to quick lending.
12. How Much Impact Will Your Credit Have?
When opening a business bank account, your personal and business credit can have varying degrees of impact. Here’s a breakdown of how credit can influence your banking experience:
- Personal Credit: For small businesses or sole proprietorships, personal credit often plays a significant role. Banks may consider your personal credit history when evaluating your eligibility for certain types of business accounts or when determining the terms offered. A strong personal credit score can demonstrate your sense of financial responsibility and potentially lead to better banking terms.
- Business Credit: As your business develops and builds its credit history, your company’s credit score becomes a factor that banks consider. Establishing a positive credit profile for your business increases the likelihood that you will have access to favorable bank offers. These opportunities may include business loans or lines of credit that can support the growth and financial needs of your business.
To ensure the best possible banking experience, it’s beneficial to maintain a healthy personal and business credit profile. This includes paying bills on time, keeping credit utilization low, and regularly reviewing credit reports for accuracy.
13. Do You Have to Pay for Checks or Replacement Cards?
Whether you have to pay for checks or replacement cards depends on the bank and account type. Some banks offer a certain number of checks for free, while others charge a fee for each check issued.
Similarly, banks may have policies regarding replacement cards. Some banks offer them as a complimentary issuance in customer service, while others charge a fee for replacing a lost, stolen, or misplaced card.
14. Will You Know Your Banker?
For banks in smaller communities or local branches, you are more likely to develop a personal relationship with your banker, who can become familiar with your business and provide customized support.
Some banks prioritize relationship banking and assign dedicated bankers or relationship managers to business clients — offering personalized assistance and tailored financial solutions.
However, in larger banks, direct and regular contact with a specific banker may be less common due to their decentralized structure.
In any case, most banks do provide various communication channels to connect with their customers and address their inquiries or banking needs.
15. Can the Bank Grow with You?
Once you’ve selected a bank that aligns with your needs, cultivating a longstanding relationship with them can be beneficial. Your reputation with the bank, including your credit score and access to rewards, often grows over time as they recognize your business’s credibility.
Consistent on-time bill payments and transparent financial communication — possibly facilitated by an accountant, can enhance this relationship. In which case, this strategic growth with your bank could steer your business toward greater success.
To give you an inside scoop on the best banks to choose from, check out this article on the 11 best banks for an LLC.
Guide to Dealing With All Your Banking Needs
Opening a business bank account calls for thoughtful consideration of numerous factors, such as the types of banks, their services, fees, minimum balance stipulations, and interest rates. Comparing these aspects aids in making a well-informed decision that suits your unique business needs. However, it can take up a considerable amount of time away from your business to ensure the best choice.
In order to save time get expert aid in managing your financial records. Doola’s bookkeeping services can help streamline your financial needs and get your cash flow organized promptly. Contact us today to enhance your business’s financial management and get back to what matters most: your business.
What is the purpose of a business bank account?
A business bank account is designed to manage business finances, segregate personal and business transactions, and provide specialized banking services for businesses.
How do I choose a bank account for my business?
Select a business bank account based on the bank’s standing, the account’s costs and features, online services, customer support, and its suitability for your business’s financial needs.
Can I use a regular bank account for my business?
While you can technically use a regular bank account for business, it’s generally better to use a distinct business account for clearer financial records, simplified tax procedures, and access to business-oriented banking services.
What are the benefits of having a business bank account?
A business account segregates personal and business finances, simplifies bookkeeping, allows easy expense tracking, bolsters business credibility, and offers specific business banking facilities.
Can you transfer money from a personal to a business account?
Yes, you can transfer money from a personal bank account to a business account. However, to maintain distinct finances and ensure accurate record-keeping for tax and accounting purposes — such transfers should be properly documented and done judiciously.