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Your guide to comparing small business bank accounts
Your business needs the right financial plan for the best chance of success.
The right bank account can help you keep track of your expenses and provide flexible banking. But which account is right for your business like depends on your finances and how you plan to use the account.
- Unlimited free electronic deposits
- 100 transactions per month at no charge
- $5,000 cash deposit per statement cycle without an additional fee
Editor's pick: Chase Total Business Checking
If you’re new to Chase, get $200 when you open this account and complete qualifying activities. It boasts convenient features to help small and growing businesses reach their goals.
- No minimum deposit to open
- Chase Military Banking available for servicemembers
- Authorize users to pay bills, transfer funds or wire money
- Access to Chase Online Banking and Chase Mobile Banking
Comparing business bank accounts
- Determine how you’ll use your business account. This will help you determine the features you need to compare options. If you want an account for investment savings for profits you deposit in one lump sum, then you’ll need a high-interest-rate savings. However, for regular deposits and everyday use, you’ll need a checking account with easy access.
- Keep the size of your business in mind. Some business savings accounts require a minimum balance to open the account, or may be able to be used fee-free if a certain balance is maintained. Other accounts will offer high interest only if the account balance is above a certain minimum amount, so choose the account with minimum balance requirements that suit your needs.
- Determine what functions you need. Some banks focus on start-ups and small businesses, while others offer features that help big businesses manage their finances. Shop around and get familiar with what different banks have to offer.
- Know the type of business you are. Do you invest most of the profits back into the business by investing in assets and people, or do you have big business big balances that need a safe resting place? Look at your overall value, what your overhead is and how much you make before you decide on a bank.
- Are you eligible for special programs? For example, nonprofits may have access to special accounts with low or no fees.
- Start with your current bank. Not all high-interest savings account offers are advertised. Sometimes you just need to ask. If you already have a relationship with your bank, talk a with a representative and see what they have to offer. Sometimes banks offer loyalty programs if you’ve been banking with them for a certain amount of time.
What’s in this guide?
What is a business bank account?
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.
3 types of business accounts to consider
Business checking account
This allows businesses to deposit and withdraw cash through ATM cards, electronic debit cards and checks. Some of these 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.
Business savings account
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.
Business certificate of deposit
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.
Opening a business bank account
How you open a business account depends on the type of business you have and how you plan on using the account. Some accounts allow you to apply online, while others require you to apply in person and provide details about your business.
Dealing with business finances is different than managing your personal savings accounts as you may be accountable for a lot more money and people. Not only will the investment choices and savings plans affect the person signing the checks, but other staff members, managers, customers and maybe even shareholders.
Before you open a business checking or savings account:
If you’re planning on opening a new business account:
- Determine if your business needs a savings account and its savings goals.
- Determine if the business needs another income stream or more financial stability.
- Decide how the business account will be accessed and by whom. If there’s more than one account owner, it’s recommended that legal advice is given to make the rules and purposes of the account is clear.
- Consider whether or not you want to link your business’ savings and checking accounts.
How does a business account work?
Depending on the bank you choose, there are a number of different business accounts. They’re designed to keep funds safe while the business makes transactions. It’s important to compare bank accounts to see what works for your business. Business bank accounts are designed as a place to keep the funds safe while transactions are being conducted.
Most business checking accounts will issue a debit card allowing ATM withdrawals. Many have online resources in addition to phone and in-branch banking services.
When choosing an account, factor in:
- Fees. Does the account have any monthly fees? If so, can they be waived by meeting achievable requirements?
- Interest. Choose an account that has a competitive interest rate.
- Features. Common features online banking, overnight deposit boxes and lines of credit to maintain cash flow.
- Accessibility. What options do you have for accessing your account? Look into the bank’s online options, whether there are branches near you, what hours help is available and whether you’ll be able to easily transfer money between your checking and savings accounts.
What are the pros and cons of a business bank account?
- Creates a central place for funds. A business bank account can keep all of your funds in one central place so they’re easy to track and manage.
- Separates your personal and business funds. Separating your business and personal expenses helps keep you from getting into trouble for making the wrong deductions come tax time and can help protect you from facing personal liability if your business gets into trouble.
- Looks professional. A business bank account can help establish the business’ credibility with customers and creditors.
- Helps with accountability. Regular statements from your business accounts help keep you accountable for your finances and are useful at tax time. You can also easily report earnings to your board or shareholders.
- Fees. Banks can charge monthly fees, plus fees for not maintaining a minimum balance and for exceeding a certain number of transactions.
Business bank accounts for small businesses
Small business owners will likely have special considerations when it comes to choosing an account. One of the biggest considerations is how your business operates.
For example, if you have a cash business, you’ll want to choose a bank that offers local branches, makes it easy to deposit cash and has hours that work with your schedule. If you conduct most of your work online, it’s particularly important that your bank allows you to easily track your incoming payments so you can make sure any contractors or clients are paying you on time.
If you have employees, you’ll want to choose a bank that works seamlessly with your payroll system. And if plan to make itemized deductions on your taxes, your banks system for reporting transactions can have a big impact on how easy that is.Back to top
Other financial products to consider
Aside from a bank account, your business may also benefit from:
- Business credit cards. These credit cards are linked to an account that is intended primarily for business expenses, and can be valuable instruments in managing your cash flow. If used strategically, these cards can be good tools to earn interest by putting your money in a savings or cash management account during the interest-free period of your credit card. It’s also good to note that these cards can earn points.
- Niche accounts. Some banks will offer tailored accounts for certain industries like agriculture or online sales.
- Business loans. If your business plans to expand in the future, you may be able to get a better deal by using a bank you already have a business account with. Keep in mind that many financial institutions won’t lend to business owners who don’t have a dedicated business account.
A business bank account can help your business keep track of finances and simplify tax season. To find the option that’s right for you, compare bank accounts from different institutions.
Frequently asked questions
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