Choosing the right business checking account is an important decision for  your business.  When selecting a business checking account, it's important to look for one that will help you efficiently run your company’s daily operations. A good bank offers benefits such as expense tracking, accepting credit card payments, and easy to review reports for managing cash flow and end of year tax filings.

Learn how to choose a business checking account that will give you the necessary benefits to help you manage and grow your company effectively.
 

Business Accounts vs. Personal Accounts

When opening a business account, it’s helpful to understand the differences between business and personal checking. Personal accounts have limited added benefits and services and are tailored to individual purchases rather than business transactions.

Alternatively, banking institutions offer business accounts tailored to business transactions. A business bank account is designed to manage cash flow in and out of your business. These benefits are due to the features that banks build into business checking accounts, such as check-writing, payment acceptance services, and cash management features.

A business account helps protect your personal assets by keeping your business and personal funds separate. For example, when filing yearly taxes with the IRS, accurately accounting for the cost of running the business, such as buying equipment and supplies, paying employees, and accepting payments, is crucial. Using a business account ensures you can easily account for these expenses rather than sifting through personal transactions.

If you have an incorporated business such as a Limited Liability Company (LLC), or corporation, you cannot operate your business from a personal account. Banks require those kinds of entities to open a separate and distinct checking account under the business.

Opening a business account that you only use for business transactions offers many advantages, including:

• Better personal liability protection
• Protect business assets from personal lawsuits
• Simplified tax filing and records access
• Increased credibility when conducting business transactions 
• Easier to track business expenses
• Credit advantages
• Prerequisite for a business loan
• Ability to accept credit card payments in person and online
   

Types of Banks

Finding the right business checking account requires you to compare options from different financial institutions. One approach to find the right business bank for your needs is to narrow down by size. Large, national, regional, and independent banks each offer unique benefits and drawbacks.

Large National Banks

You get widespread access to ATMs and branches when you bank with large national entities such as Bank of America, Wells Fargo, or JPMorgan Chase. If you value in-person banking or just want to cut down on your out of network ATM fees, the coverage of a big national bank may work for you.

Big banks can provide perks that smaller banks can’t afford. For example, Chase for Business offers three small business-friendly checking account options, featuring no minimum opening deposit, unlimited e-depositing, and access to thousands of Chase ATMs and branches nationwide.

Regional Banks

Regional banks are mid-sized financial institutions typically consisting of multiple bank branches offering banking services to a particular region. Regional banks have between $10 and $100 billion in total assets.

Regional banks pair a smaller bank’s customer service with a national institution’s convenience, offering a sizable network of branches in your area, competitive rates, and fees. They may also provide comprehensive investment services.

Small Independent Banks

Smaller, independent banks may not have the scope of their larger counterparts, but they can offer more personalized service due to their smaller client base, and they usually charge lower account fees.

Many small banks offer attractive rates on loans and savings accounts. They may also have more relaxed criteria for obtaining business loans or lines of credit once you have an established account.

Choosing a Business Checking Account: Factors to Consider

Before choosing a bank for your business checking account, think about your priorities. Consider a potential business checking account’s fees, services, and loan availability. Also think about convenience factors such as online banking, and the overall relationship you want to have with your financial institution.

Fees

When choosing a business checking account, familiarize yourself with your bank’s fee schedule for this type of account. Most banks charge maintenance fees for business checking accounts. Some banks will waive the monthly fee if you meet their minimum balance requirement.

Additional fee requirements for banks include:

• Transaction fees (in excess of the monthly allotment)
• Out of Network ATM fee
• Deposit fee (limits deposit amount and number of deposits)
• Minimum balance requirements
• Overdraft fee
• Wire transfer fee

Convenience

Picking the right bank to open your business account requires considering convenience factors. Convenience may include an online banking platform or mobile app that frees you from needing to visit a brick-and-mortar location, and online loan applications.

Relationship

Consider the relationship you have with your current bank as well. If you already have a personal account with a bank that offers business checking, sticking with your current institution if you are satisfied may be the most convenient option for you. Your relationship with the branch manager and banking specialists can help you as your business needs change and grow with time.

Services

When choosing a business account, consider the services your bank offers. For example, most national banks offer check-writing, bill payment, wire transfer services, debit card access, and safety deposit boxes.

Some business checking services include a certain number of printed checks per month. However, ordering additional checks can become costly and time-consuming if your business requires more than the minimal check quantities provided by the bank.

Instead of switching banks due to costly check ordering, consider ordering business checks from Tech Checks. Ordering with Tech Checks allows you to continue using your bank’s existing services while at the same time saving money on the cost of checks. Tech Checks guarantees professional business checks that work with your financial institution and accounting software.

Loan Availability

Growing your business may mean obtaining financing through a business loan or line of credit. Choose a bank that offers business loans and familiarize yourself with the loan application process.

Even with good credit, small business loan approvals can be hard to come by. If you plan to take out a loan for your business, look for a bank that offers the type of business loan, maximum loan amounts, and interest rates that work for your business.

Types of loans include term loans, business lines of credit, SBA loans, and other business loans.

Depending on your business, big banks may be your best option for a business loan as they have the experience and financial stability to back most loans, even riskier ones. But sometimes, the relationships of a local bank can help get certain loans approved where the big banks won’t, so it pays to shop around. Also, larger banks often have higher fees and stricter approval terms, so make sure you consider all your options when choosing your lender.