Prior to starting an online business, you’ll almost certainly require a business bank account. While the selection and availability of these products has increased in recent years, they are still heavily marketed by individual banks (as well as numerous third-party intermediaries).As such, it can be hard to determine which bank is the best option for your needs.
If you’re fortunate, your local bank may provide great business banking options that meet your needs at an affordable price. Alternatively, you may need to perform some due diligence to uncover the hidden gems in your area.
The process of choosing the best business bank account for your business isn’t difficult once you understand what to look for and what options are available to you. In this article, we’ll explain everything you need to know about choosing the best business bank account for your needs – including pros and cons of each type of checking account and advice on where to find them.
Business Checking Accounts 101
There are two primary types of business bank accounts: business checking accounts and business savings accounts. Business checking accounts are designed to provide you with a line of credit to use for business expenses (with the expectation that you will pay it back).
Business checking accounts usually come with fees that make the line of credit less attractive. In contrast, business savings accounts are designed to give you the opportunity to earn interest on your unused funds. Business savings accounts are best suited for businesses that don’t plan on using any of the funds in the near future.
There are additional business bank account types as well, including money market accounts, business CDs, and payroll accounts. While these accounts are also valid options, they are less commonly used. Business checking accounts, savings accounts, and money market accounts are the most common types of business bank accounts.
Why are there so many types of business bank accounts?
In the past, banks only offered business checking accounts. However, as the number of businesses using online banking grew, banks began to offer a wider variety of products. Some banks offer multiple products (such as business checking and savings accounts), while others only offer one or two options. Business checking accounts are designed to provide a line of credit to use for short-term business expenses.
The amount of the credit will vary depending on the bank, but it is typically less than the amount in your account. Business savings accounts are designed to give you interest on your unused funds. Some banks may offer additional perks, such as free online bill pay and free checks.
What to look for in a business bank account?
When choosing a business bank account, you should be looking for a few key things. The first is the cost associated with the account. Business bank accounts typically have a wide range of fees associated with them – including monthly maintenance fees, per-transaction fees, and overdraft fees.
To help you avoid unnecessary expenses, you should also look for a bank that offers competitive interest rates on your business savings account. Finally, you should select an institution that offers you easy access to your funds when necessary.
Finally, you should also consider the reputation of the institution that you choose to do business with. You can use customer reviews and ratings to help you determine which businesses are the best fit for your needs.
Types of Business Bank Accounts
– A business checking account is designed to provide you with a line of credit to use for short-term business expenses. The amount of credit you are provided will vary depending on the bank, but it is typically less than the amount in your account.
– A business savings account is designed to give you interest on your unused funds. Some banks may offer other perks, such as free online bill pay and free checks. – A money market account combines elements from both a business checking account and a business savings account. You’ll be provided with a line of credit, but you’ll be able to earn interest on your unused funds.
– A business CD (certificates of deposit) is an investment in your business. CDs typically have higher interest rates than business checking accounts, but you’ll be unable to access your funds until the CD reaches maturity.
– These are banks that offer only online products. – Online-only banks are not regionally restricted and are therefore a good option if you live in a remote area.
– Online-only banks typically have a wider variety of business bank account options than traditional brick-and-mortar banks.
– Online-only banks are generally secured by the same FDIC insurance that applies to normal bank accounts.
– There are some online-only banks that may not be FDIC insured. Be sure to check with the bank that you are considering before opening an account.
Virtual Bank Accounts
– Virtual bank accounts are often referred to as traditional bank accounts that operate online. – Virtual bank accounts will typically have physical bank branches in every state.
– Virtual bank accounts typically have higher minimum balances than online-only banks.
– A virtual bank account is a good option if you want access to a wide variety of account types, but can’t find the perfect online-only bank.
Selecting an Online Bank for Your Business Account
There are several things you should be looking for when selecting an online bank for your business account. The first is the availability of the different types of business bank accounts.
– You should also be sure to select an institution that offers free online bill pay and free email notifications for all of your accounts.
Finally, you should be certain that the institution you choose has a strong reputation.
We’ve scoured the web and found these top picks
Known as one of the best banks for a small business, Ally is a great option for business owners of all sizes. Ally offers competitive rates, no minimum balance requirement, and no foreign transaction fees.
– Capital One
Capital One offers a wide variety of business bank accounts, including savings and money market accounts, as well as business CDs.
– Charles Schwab
Charles Schwab is a great option for investment and retirement accounts, but also offers competitive business banking options.
Chase is a well-known name in the banking industry and offers competitive rates, no minimum balance requirement, and no foreign transaction fees.
Feel free to explore these top picks and discover which business bank account is the best fit for your needs.
Choosing the best business bank account for your needs can be a daunting task. Fortunately, this article has provided you with everything you need to know about selecting the best business bank account for your needs.
From business checking accounts to virtual bank accounts, you now know what to look for when determining which type of business bank account is the best fit for your needs.