How to Change Business Bank Accounts

The Credit Review

June 21, 2023 Business Banking

How to Switch Business Bank Accounts

To switch bank accounts, you should first compare other business bank accounts, open the account, ask your new bank to help move your funds from the old bank, update any automated transactions you have set up to use your new account, and notify your vendors and customers of the change.

While changing banks can feel like a hassle, there are many reasons you might do so. For example, you could find that your company has outgrown its current business bank account or that another business bank is offering a better deal.

Regardless of why you’re making the switch, knowing how to change your business bank account with minimal disruption to your company is important if you want to take advantage of a new business bank’s offerings.

Switch Business Bank Accounts - Pros and Cons

Before switching your business bank account to a new bank, consider the benefits and drawbacks of doing so.

Pros

Access new tools and features. The main reason to switch business bank accounts is to access new services that are offered by a different business bank. For example, if your current bank doesn’t have payroll you might want to switch business banks as you hire more employees and need an account that offers help with payroll.
New account bonuses. Business banking is a lucrative business, so banks often offer sign up bonuses to business owners when they open a new business bank account. Switching your business bank account can earn you hundreds or thousands of dollars in sign up bonuses.

Cons

Takes a lot of effort. It takes a lot of work to switch business bank accounts. You probably have a lot of automated processes tied to your existing bank account and vendors who send or receive electronic transfers using that account. You’ll need to move all of your money to a new bank, set up new automation, and work with your vendors and customers to make sure they start using your new account.
Split your finances between banks. Some aspects of business banking can’t be moved to a new bank quickly and easily. For example, if you have a business loan, you can’t just move it to a new bank and start paying them instead. You’ll either have to keep the loan at the old bank until it’s paid off, splitting your finances between two banks, or refinance it with a new loan at the new bank.

Signs You Need to Switch Business Bank Accounts

Your business bank account is one of your business’s most important tools. These are some signs that might indicate it’s time for a change.

High fees

One of the drawbacks of business bank accounts, in general, is that they often have high fees. While it’s easy to find a consumer bank with low or no monthly fees, it can be more difficult to find a fee-free bank accounts.

However, even if many business banks charge fees, that doesn’t mean you should be willing to pay them unnecessarily. Look at your business bank account’s statement and try to identify all the fees you’re paying. Depending on how your company operates, you might be paying more than just a monthly fee, such as transaction fees, cash deposit fees, or wire fees.

If you identify an area where you’re paying a lot in fees, consider switching to a business bank that has lower fees for that service.

You don’t use your bank’s physical branches

If you switch business bank accounts, it can help you start using the right type of bank for your company.

Depending on the type of business you operate, you might find yourself doing most of your banking in person or doing most of your banking online.

There are many perks to using a bank with a large network of ATMs and physical branches. Getting in-person service is nice and it makes it easy to deal with cash deposits and withdrawals. However, running a business bank that has physical locations means paying significantly more overhead. Business banks pass those costs on to their customers by charging higher fees.

By contrast, online business banks are less expensive. They’re also more likely to offer perks like integrations with business accounting or bookkeeping tools. If you’re using a business bank with physical branches but find yourself doing most of your banking online, it might be a good idea to switch business banks.

Poor customer service

Switching business bank accounts helps you get away from bad customer support. Even if your bank was once great, things can change over time, and you might find that it is no longer providing the same quality of customer service that it once did.

Customer service is essential in any line of business, but it’s especially important in the world of banking. You need to be able to trust that your business bank will be there to help you when you need it.

A good business bank should be able to advise you about the different ways it can help your business and help you make decisions about things like which type of loan to use. Switching your business bank account can get you the help you need.

Other aspects of customer service, like the quality of your business bank’s mobile app or website, are also important. If your bank isn’t keeping its technology up to date or treating you properly, it might be time to switch business bank accounts.

Another business bank offers more exciting perks

You might switch business bank accounts to get access to lucrative perks or sign up bonuses. Business banks will compete to draw in customers, so many offer perks to help draw in business. This is especially true for online business banks.

For example, you might find a business bank that offers discounts on things like accounting or bookkeeping services or advertising, free credits for some business services, or other perks for your company. These benefits can be an appealing reason to switch your business bank.

How to Switch Business Bank Accounts

Deciding to switch business bank accounts to a new bank is one thing. Actually changing your business bank is another. It can be a bit of a process and it’s important to make sure you’re careful to make sure it goes as smoothly as possible.

1. Research and choose a new business bank

The first step to switch business bank accounts is to find the bank you want to switch to.

Before making the change, think about what you want to get out of switching business bank accounts. You might be looking for lower fees, better service, more features, or all of the above. If you know what you’re looking for, it can guide your search.

Once you’ve figured out the criteria, you can start researching new business banks. Keep in mind that your new bank should meet your current needs but it should also be able to grow with your business. You don’t want to find yourself having to switch business bank accounts again in a few months or a year down.

If you need help finding a good business bank, consider asking for recommendations from other business owners or your accountant or bookkeeper.

2. Open an account

Once you’ve chosen a new business bank to use when you switch business bank accounts, the next step is to apply for your new account.

Opening an account at a new bank will be just like opening your first business bank account. You’ll have to provide some personal info and information about your business, then make an opening deposit.

Once the account is open, make sure it works like you expect it to and has the features you need. You’re then ready to switch business bank accounts in earnest.

3. Ask your new bank for help with the transfer

Switching business bank accounts gets easier if you have help. Remember, business banks have a vested interest in drawing in new customers. That means that your new bank should be willing to help you switch business bank accounts.

Ask your new bank for a transfer kit. This kit will come with all of the information you need to make the transition as seamless as possible. Your new bank can also reach out to your old bank to help streamline the process, pulling funds into your new account and making it easier for you to change your business bank account.

4. Change automatic transactions to your new bank

Before you completely switch business bank accounts, draining your old business bank account and closing it, you’ll need to identify any recurring and automated transactions that are tied to that account.

For example, you might have automatic payments for utility bills set up, allowing your local utilities to draw funds right from your bank. If you switch business bank accounts and forget to change the automatic payments to your new account, you’ll miss payments and might come to work one day to find the lights turned off.

Once you’ve identified any recurring transactions, switch them to your new business bank account. You might want to keep the old account open for a couple of months just to make sure you didn’t miss anything.

Notify third parties of the change

To complete the process of switching your business bank account, you’ll need to inform any third party that interacts with your account of the switch. Your new bank might be able to help by providing an account transfer letter that outlines all of the details.

Send this information to people like your vendors or customers that make deposits directly to your business bank account. Timing this change properly is important. For example, it’s probably a bad idea to try to switch your business bank account in the middle of your monthly payroll.

Bottom Line

Switching business bank accounts can be a process, but it's worth doing if you can get access to valuable new tools or banking features. Before you switch to a new business bank, consider not only your current needs but whether the new bank can grow with your company and meet its needs for the long term.

To switch business bank accounts, keep these things in mind.

Not sure where to start looking? Here are our top picks for free business checking accounts, best credit unions, bank accounts for small businesses, business checking accounts for startups and freelancers, and the best online business bank accounts.

Can I switch business bank accounts to another bank?

Yes, you can switch business bank accounts to another bank. All you have to do is open a new business bank account, move your money, and ensure all your automatic transactions are moved to the new account.

Is it easy to switch business bank accounts?

It can be complicated to switch business bank accounts if you have a lot of automatic transactions set up with your old bank. You’ll want to make sure you move the transactions over to the new account before closing your old bank account.

How long does it take to switch business bank accounts?

You can switch business bank accounts in as little as a few days or a week if you don’t have any automatic or recurring transactions set up in your old bank account. If you do have recurring transactions, you might want to spend a longer time on the process to ensure you’ve properly moved all of the activity to the new account.

Do I need to switch business bank accounts for a new business partner?

Changes in business needs are the biggest reasons businesses consider switching business bank accounts. However you do not need to switch banks. Simply visit the bank, with the joint owner, and present the required documents. The bank will generally require both owners to complete and sign a joint application form and signature card, which authorizes both owners to have full access and control of the account and turn it into a joint bank account.