Many small business owners are tempted to use their personal bank accounts for business purposes. However, the most successful and experienced business owners all have at least one bank account dedicated solely to their business operations. This is for a number of reasons. Having a business account makes it easier to track your company's expenses and implement better loss prevention. Also, your customers and employees will feel like they’re interacting with a professional company when they see receipts or payments from a bank account in your company’s name. In addition to presenting a more professional image for your business, having a bank account devoted to your business will make you eligible for certain tax credits available to small businesses that would otherwise be unavailable to a business operating under an owner's personal bank account.
Measuring all of the different services, fees, and amenities offered by banks can be intimidating, so we’ve created a list of five things to look for when choosing a small business bank account. After you have nailed down which features and benefits will be most beneficial to your company based off of our list, we will discuss the top five bank accounts available to small businesses. We will provide an overview of each bank account that will cover the pros and cons and compare the fees, accessibility, features, interest rates and customer support quality of each bank. In this article, we will discuss how you can be sure you’re making the right choice when choosing a bank to host your small business account.
What to look for in a small business bank account
Finding the perfect small business bank account can be daunting. To ensure you make an informed decision, there are a number of factors that you need to consider first. But before we discuss which factors to consider, it is important to note that you should not go with the first option you come across. We know, all of the shiny features and benefits can be tempting, that's because they were designed to be. Don’t be like a moth to a lamp, use that frontal lobe that you’ve been blessed with and consider every option before making a final decision.
Did you know that some banks offer bank accounts with no caps or fees for cash deposits? This can be a huge money saver for small businesses that primarily conduct business via cash transactions. Some bank accounts like the Chase Business Complete Checking℠ account do not require a minimum deposit to open an account. Other accounts like Novo Business Checking even include an ATM fee reimbursement feature that works for ATMs worldwide. If overdraft fees are important to you, many banks don’t charge overdraft fees for business accounts. Do some research and find out which bank has the features most important to your business.
As a small business owner, you need to be able to protect yourself from theft and other security threats. That means controlling who has access to the business account. What does access mean in this case? Anybody with access to your business account will have the ability to see account details, conduct transactions, or handle other account-related activities. Obviously this person should be trusted, and your bank needs to confirm their identity often. Many banks offer this kind of protection to their customers with small business bank accounts.
Online Banking and Mobile Apps
With new technology like online banking and mobile apps, you can conduct business anytime and anywhere. If you or the individuals who you have given access to your bank account wish to handle business expense disputes or any other kind of financial activity, it can all be done via online banking. Most banks these days offer online banking with an included mobile app, so if you come across a bank that doesn’t, that may be an indication of other things that the bank is behind on tech wise.
Many banks offer special interest rates to businesses that are not available to personal bank accounts. This could save you a lot of money in the long run. Take a second to research the banks that you’ve chosen so far and see what kind of interest rates they offer. Use a calculator to determine how much money you would save going with one bank over another. Just seeing simple percentages doesn’t have the same impact. Seeing the actual amount of money you will be saving will help you be confident in your final decision.
Being a small business owner, you appreciate people and the relationships you build with them. Finding a bank with a friendly staff that offers around the clock support can help take the pain out of customer service interactions. A good bank will be thankful for your business, and do everything they can to make you happy.
Top 5 best bank accounts for small businesses
After reading through the five things to consider when shopping for a small business bank account, you should have a good idea of what features and benefits are most important to you and your business's growth. For this portion of the article, we will look at the top five best bank accounts for small businesses. We will provide information about the pros and cons of each account and do a comparison of fees, accessibility, features, interest rates and customer support to help you go with the bank best suited for your business.
Best Overall - Lili
Lili is one of the many business bank accounts out there that appeals to entrepreneurs and freelancers. Dealing with quarterly taxes and separating personal and business transactions are important aspects of managing your finances. And the tools that Lili creates can make this easier. Additionally, the low (or no) fees can also offer significant savings compared to other banks' offerings. However, the transaction limits mean Lili likely won’t be a good fit for anyone who’s freelancing full-time, makes large business purchases, or sells high-cost products or services.
- Earn 1.5% APY with Lili Pro
- No minimum deposit or monthly balance requirement
- Built-in tools for managing your business’s finances
- No fees for non-sufficient funds, covers any overdraft on Visa Business Debit Card up to $200 (available for Pro users), transactions, or domestic withdrawals from MoneyPass ATMs
- All business types are accepted (single member LLC, multi member LLC, general partnership, limited liability partnerships, S-Corporation, and sole proprietors)
- Doesn’t support wire transfers and has lower limits for deposits, transfers, and withdrawals
Best For Earning Interest - BlueVine
The BlueVine Business Checking account is an online-only FDIC-insured account through The Bancorp Bank. You can set up an account in just a few minutes, and access your account online with either a browser or the mobile app (for iOS and Android phones). Beyond its checking account, BlueVine offers other services, including a line of credit.
- Earn 2.0% APY on your balance up to $100,000
- Create up to 5 free sub-accounts (6 total accounts) for increased control and flexibility over business budgets
- FDIC insurance up to $250,000 through Coastal Community Bank
- No minimum deposit or balance requirements
- No monthly service fees, non-sufficient funds fees, transaction fees, or ATM fees at MoneyPass ATMs
- Quick and easy new account opening that takes as little as 60 seconds
- Shared account access capabilities (securely invite authorized users for task delegation)
Relay stands out for small business owners who need access to multiple bank accounts and debit cards for their businesses and employees. Customers who want to integrate their banking with tools like QuickBooks Online or Xero may also be satisfied with Relay. That said, the platform does not allow users to deposit cash, so it’s best reserved for e-commerce businesses and other operations that do not accept cash payments.
- No monthly fees or balance requirements
- Mobile check deposit
- Multiple accounts and role-based permissions
- No cash deposits
- Customer support is limited
- Places 6- to 7-day hold on check deposits
Best For Self Employed - FOUND
Found is a fintech company that caters to freelancers and self-employed individuals. Business owners can take advantage of the company’s business checking accounts and debit cards, which are provided by Piermont Bank, Member FDIC. Found also offers invoicing, bookkeeping, and tax tools and connects with other popular banking and business platforms, including QuickBooks, Stripe, Cash App, PayPal, Square, Lyft, Uber, Venmo, and eBay.
- Free sign-up and no account maintenance fees
- No credit check
- Unlimited transactions
- Instant withdrawals come with a fee
- Online reviews are poor
- Charges fees on invoices paid with debit or credit card
$400 Bonus Offer - US Bank
U.S. Bank is an American financial institution that offers extensive business checking account options and other banking services. The bank’s more than 2,000 branches make it an excellent choice for business owners who prefer an in-person banking experience—though the institution also offers robust mobile banking tools. Consumers can also choose from multiple checking account packages built for businesses of all sizes.
- Packages are available without any monthly maintenance fees or with waived maintenance fees
- Consumers can manage their accounts through U.S. Bank’s mobile app
- U.S. Bank has more than 2,000 branches spread across 26 states
- Checking account features are basic with the free Silver Business Package
- Customers pay an additional fee for every transaction beyond the monthly limit
- Basic business checking accounts do not pay interest, while some premium accounts pay up to 0.005% APY
The benefits of having a dedicated bank account for your business is clear. You can present a more professional image, stay organized, and take advantage of tax credits. Choosing the right bank account for your business can be daunting, but after following the instructions of this article, you should have a clear understanding of the banking needs of your business and be able to make an informed decision about which bank is best suited to help your business grow and be successful. Remember, don’t just go with the first bank you come across. Compare the fees, accessibility, features such as online banking and mobile app, interest rates, and customer support services to make sure you’re taking advantage of everything the bank you choose has to offer. Use the list of pros, cons, and features above to compare each bank to one another and decide which is best for you.
Other Resources For Small Business Owners
Full review of each bank from the list:
- Best Business Checking Accounts Of February 2023
- Best banks for small business loans in February 2023
- American Express Launches Financial Management Tools For Small Businesses
Frequently Asked Questions
What Is the Difference Between a Business and a Personal Bank Account?
A business bank account offers many more benefits than a personal bank account. For example, some banks do not charge an activation fee, and offer special interest rates to business accounts. Also, having a dedicated bank account for your business can help create a more professional image for your company.
What Do You Need to Open a Business Bank Account?
- Employer Identification Number (EIN) (or a Social Security number, if you're a sole proprietorship)
- Your business's formation documents
- Ownership agreements
- Business license
Can I Open a Business Bank Account Online?
Yes! Opening a business account is just as easy as opening a personal account. Just head to your bank's website and follow the instructions from there. If you’re having trouble, try visiting the help or contact us pages of your bank's website to find a solution.
Can I Use My Personal Bank Account for My Small Business?
You can, but why would you? When you use your personal bank account for business transactions, the receipts your customers receive, and the payments your employees get will have your personal information on it. Having a dedicated account will look more professional. Also, banks have designed their business accounts specifically for your needs, so you are likely to benefit from having one.
Do I Need a Business Account If I Am Self-employed?
You do not absolutely need one, but it’s a good idea to have one. Managing your expenses is much easier when you have a business account. If you are using a personal bank account for your small business, you risk mixing up your personal finances with your business finances. This will prevent you from analyzing data and making changes.
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