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Business bank accounts help you stay in control of your company’s finances — regardless of how small or large it may be. Use this table to compare business bank accounts based on their fees, minimum deposits and other factors.
This article was reviewed by Doug Noll, a member of the Finder Editorial Review Board and award-winning lawyer, mediator and author with over 40 years of experience in the legal field.
Business banking refers to business-specific products and services offered by financial institutions, which are designed to help business owners better manage their money. It can encompass many different services, including checking and savings accounts, as well as business loans, lines of credit and merchant services.
Every business owner — regardless of the company’s size — needs a business bank account to keep their personal and professional finances separate. A business bank account can be used to pay bills, purchase new assets, set aside money for a rainy day and receive payments from customers. In addition, a business bank account can be used to track cash flow for legal and tax purposes.
The most common types of business bank accounts include:
This allows businesses to deposit and withdraw cash through ATM cards, electronic debit cards and checks. Some business checking accounts may require a minimum deposit and others will require proof of business and identification. Banks have many different types of checking accounts, some with transaction limits and some without.
A savings account is an option if you want your money to accrue interest. It provides the business with a place to store liquid assets in order to save up for a big purchase or set aside money to get through slow times. A business savings account may require a minimum deposit amount, though it depends on the bank.
A certificate of deposit (CD) allows you to put aside money for a fixed amount of time with a fixed amount of interest. It provides a guaranteed return on your investment and can be useful for long-term savings, but there’s usually a penalty fee if you need to withdraw money early.
In addition to business bank accounts, business credit cards give entrepreneurs an easy way to pay for expenses. Many cards offer cashback rewards or points you can trade for travel. Compare today’s business credit cards to find out which one is be best for you.
Most business bank accounts have these features to help you manage your cash flow:
There are hundreds if not thousands of different business accounts out there. When choosing an account, factor in:
Here’s a list of the top three checking and savings accounts for businesses. If these don’t fit your needs, explore the full list of best accounts until you find one that’s right for you.
Having both a checking and savings account can help you earn interest on extra funds and spend money when you need to. And by linking two accounts at the same bank, you’ll be able to quickly transfer money back and forth.
A business savings account allows you to earn interest on your company’s funds while you’re not using them. These accounts are a convenient way to earn passive income and can be linked to your checking account for easy access whenever you need it.
A business checking account allows you to spend money when you need to. These accounts can be used to handle day-to-day expenses, pay invoices and wages and receive payments from clients and customers.
Business bank accounts have quite a few benefits, but there are also some drawbacks to be aware of.
Yes, most business bank accounts are perfectly safe. But before you move your company’s money to a new financial institution, check that they have these three factors:
Depending on your business structure, you may be required to open a business bank account. But even if it’s not a requirement, it’s considered best practice to do it anyway. Here are three reasons why:
Applying for a business account is a lot like applying for a personal account, but there are a few extra steps you need to take:
If you’re planning on opening a new business account:
Yes. A bank can refuse to open a business bank account for numerous reasons. Financial institutions evaluate your business, your credit profile and your previous banking history depending on the financial product you’re applying for. Banks and credit unions generally look to make sure that your business is in good standing and you have all your paperwork in order. You might also be denied a business bank account if your company is considered high-risk, such as operating in the gambling or cannabis industry.
When opening an account, banks will also consider your ChexSystems Report, which is a record of previous banking history. Your report includes any previous problems you may have had with checking and savings accounts, including unpaid negative balances, bounced checks and overdrafts and involuntary account closures.
They may also take a peek at your personal credit score, especially if your business is a single-member LLC and you’re opening up a business credit card, loan, etc. Having poor credit or red flags like outstanding collections may cause banks to categorize you as a risky customer and refuse to do business with you.
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