Small Business Banking Accounts

Making the right financial decisions for your small business starts with opening the right checking and savings accounts. Doing so helps you track and manage your business finances as well as separates your business transactions from your personal ones. There are lots of different options out there that offer different benefits, charge certain fees, and accrue different amounts of interest. Here are the few things you should consider as you research business banking accounts.

Business Checking Accounts

There are many factors that play into choosing a small business checking account. If you are just starting out, have no employees, and only have a few transactions each month, you may not need one just yet. However, as soon as you start to grow and business becomes more consistent, acquiring a designated business account can work in your favor and may be necessary.

The US Small Business Administration (SBA) recommends opening a business bank account if you have applied for an employee identification number (EIN). Additionally, the more transactions—both incoming and outgoing—that you have make tracking finances in a separate account much easier. This also applies to businesses that have become incorporated or need business loans. The IRS requires incorporated companies to have a business checking account and bank lenders often see these accounts as a requirement for securing funds.

The right checking account entirely depends on your business and how it operates. Some business checking accounts incur fees if you exceed a certain amount of transactions per month. If you have high transaction activity, a checking account of this nature probably won’t suit your business.

When researching the right account for your business, always be sure to look into the associated fees and minimum requirements. For example, some banks charge fees if you cannot meet a certain minimum balance each month. You also may see transaction fees for going over your limited amount of allowed transactions per month, as well as out-of-network ATM fees and maximum deposit fees.

You also want to consider the perks and benefits of opening a business checking account. This includes:

• Convenience. Does the account offer online and mobile banking? This can make a world of difference for small business owners who are constantly in “go-mode” and need to view their transactions, manage payments, and make transfers whenever and wherever they are.
• Interest payments. Many online checking accounts offer higher interest rates if you deposit a certain amount or meet designated requirements every month.
• Merchant services. Your business account needs merchant services to accept credit and debit card payments from customers. This can be offered through your bank as well as third-party processers.

Before choosing a business checking account, ensure that it is a member of the Federal Deposit Insurance Corporation (FDIC). The FDIC provides banks and other financial institutions with insurance for any deposits you make into your checking and/or savings accounts (as well as others) to keep your money protected.

Business Savings Accounts

Savings accounts are designed for just that — saving. These accounts are where you set funds aside to accrue interest and are not meant for daily (or even regular) use. Savings accounts can be used for emergency funds, saving money for a large purchase like a car, a down payment on a home, and other significant purchases.

As a “reward” for keeping money in their savings accounts, banks offer higher annual percentage yield (APY), or interest rates. It’s important to investigate your options, because some savings accounts offer very low interest rates while some offer upwards of 5%. Most of the higher rates you will find come with online savings accounts, because online banks have lower operating costs and can therefore offer higher rates.

Keep in mind, since savings accounts are meant for saving, some financial institutions may charge you a fee if you exceed a certain amount of transactions in a set amount of time.

Bank Accounts with Republic Bank of Chicago

If you are looking for checking or savings accounts that work for your business rather than the other way around, consider the wide range of accounts we have available at Republic Bank. Our checking accounts come with tons of free services, such as online and mobile banking, bill payment, check images, eStatements, cash back debit cards, direct deposit, and more. Our savings accounts also include these features and differ in offerings based on the type of business you run and your unique needs.

Want to learn more? Call us at 800-526-9127 or visit our library for more small business financial tips and guides.