Grow your surplus capital and get business done with a high-interest account.
Set up your business for success with a high-interest savings account designed to earn you a little extra outside of your everyday checking account. A business account not only safely stores the funds you might need for equipment or taxes later, but also boosts your business’s overall credibility — critical for landing solid rates and terms on future loans when business booms.
Some of the top business savings accounts
|Product name||Maximum interest rate|
|Capital One Spark Business Savings||1.75%|
|Live Oak Bank Business Savings||1.05%|
|Community Bank of Pleasant Hill||1.66%|
|Goldwater Personal and Business Savings||1.65%|
|First Internet Bank of Indiana||1.36% – 1.66%|
What is a business savings account?
A business savings account is just like a personal savings account, allowing you to store your money and earn interest over time. When you’ve saved up enough working capital that you no longer need constant access to, you can safely grow it with reliable interest until a large purchase comes up.
To entice your business, many banks offer higher interest rates on larger deposits and balances in these accounts. The bigger your business’s savings, the more you earn.
What are the benefits of a business savings account?
Business savings accounts are designed to separate your capital from everyday transactions, helping you to manage and grow your savings. Many banks offer introductory interest rates that can boost your savings for up to six months or more, and most accounts are protected by the FDIC for up to $250,000.
- Build your savings. Keep your money safe and earn passive income when it’s not needed for everyday business, helping you achieve both short- and long-term goals.
- Avoid fees. Move your money around with minimal transaction fees.
- Easy access. Withdrawals are limited to six monthly, but you can transfer cash to your checking account online when you need it.
- Boost your business’s credit. A business account becomes a part of your overall financial portfolio, demonstrating that you’re able to successfully manage your savings and providing the support for future business loans.
- FDIC-insured. The government insures deposits for up to $250,000, so you can rest assured your money is safe.
What should I look out for?
Unlike investment accounts, there’s no risk of losing your balance with a high-interest business savings account unless your balance exceeds $250,000. Even then, banks put in place safeguards to protect your money.
To narrow down a business account that fits your business’s needs, weigh into your decision:
- Account fees. Many high-interest accounts waive fees for high balances, but ask about monthly maintenance, deposit or penalty fees for exceeding transactions or dipping below minimums.
- Transaction limits. All savings accounts limit your withdrawals to six monthly, though you can transfer money to a linked checking account for broader access.
- Potentially high minimums. To take full advantage of business perks, you may need to maintain a savings balance of $10,000 or more.
How do I compare the best business savings accounts?
Look for a savings account that meets your business’s financial goals. Most banks reward businesses with high interest on all business accounts, but you may need to focus on high-yield accounts at other banks.
Think about whether you’ll need regular access to your funds or a tool that can become part of your overall long-term investment strategy. Many banks offer high interest rates on certificates of deposit designed to lock away your money for a fixed term.
Look at advertised interest rates both around the corner and online, further analyzing fees and limitations that can eat into your bottom line. By shopping around, you can get the strongest rates and perks your business is eligible for today and as you grow.
To get the most out of a business savings account, compare similar factors across each of your options, including:
- Fees. If you’re a smaller business, you may be on the hook for monthly maintenance fees, though many banks waive these fees if you pick up other accounts or products.
- Transaction limits. Government regulations on savings accounts limit withdrawals to six each statement cycle, though penalties for exceeding this limit vary from fees and penalties to closing your account outright. Know what you could face.
- Interest rates. With so many banks competing for your business, you might find higher introductory rates applying to your savings for up to six months or more after opening your account.
- Accessibility. Many online banks offer higher interest rates than you’ll find at your local bank. You won’t have the convenience of a neighborhood branch, but an extensive ATM network and linked account with your local bank could be worth it.
- Minimum balance. How much you’ll need to keep in your account can range from a few bucks to tens of thousands of dollars, with higher rates applying to higher balances.
Do large bank transfers take longer?No. Your bank’s system can support transfers of $2,000 to $200,000 without extra lag. Keep in mind that your bank may limit the amount you’re able to transfer in one transaction or to a specific recipient, though you can often make the case to increase your limit as your business grows.
Case study: How keeping surplus capital in a business savings account can help grow your business
Maddy works a full-time government job and has two children under the age of 12. As a single working mother, Maddy started an out-of-home baking business selling custom macaroons to friends and family. Now into the second year of her home business, her client base has grown and her services have expanded to include baking special occasion cakes. Maddy knows she will need to upgrade her oven to accommodate the growth of clients and order sizes. About six months into her business, she opened a Capital One Spark Business Savings account.
Because Spark Business Savings offers a competitive introductory interest rate of 1.75%, she hopes this will help her afford a bigger oven and other industrial-sized kitchen appliances she needs to accommodate her growing business. In addition, the account charges no monthly service fees and offers online and mobile banking services, which means she is able to manage her funds anytime, anywhere.
How am I taxed on my business savings account?
The interest you earn on a business savings account is considered taxable income. If you earn more than $10 in interest on your account, you’ll receive IRS Form 1099-INT to file with your annual taxes.
Compare with personal savings accounts
Your business may be ready to set aside some of its hard-earned cash into an account that offers high interest to keep it growing. Reliable rates mean steady passive income, and most accounts offer the protection of the FDIC for up to $250,000.
To take full advantage of these high-interest savings accounts, look for low fees and accessibility that meets your business’s demands today and in the future.