Running a business requires extraordinary levels of commitment. Having to divert your attention to deal with avoidable issues on the financial end of things is not how you want to be spending your time.
A reliable business bank will provide you with all the tools and services you need to manage your financial tasks efficiently. With the right business checking account, you’ll be able to make cash deposits, process high-volume transactions, write and deposit checks, obtain debit cards for employees, earn interest on your funds, and perform other business-related financial activities.
In this article, we will show you the key features of the best business bank accounts and how to select the right business checking account for your company.
You’ll learn:
- Why Is It Important to Have a Small Business Bank Account?
- What are the Features of the Best Business Checking Accounts?
- How to Find the Right Bank Account for Your Small Business
- The 10 Best Bank Accounts for Small Businesses
Why Is It Important to Have a Small Business Bank Account?
Below are some of the reasons why you need a business bank account:
It keeps your business and private funds separate
Intermingling your business and personal finances will make it difficult to maintain the accuracy of your financial records. This can make tax time each quarter a nightmare, as you will have to spend hours or days sorting your business expenses from your personal expenses.
To avoid having to go through such a headache, or worse still, having to pay an accountant or bookkeeper extra to help you sort through the mess, get a business bank account.
It makes it simple to assess the financial performance of your business
A dedicated business bank account makes it easier to know exactly how much money your business has on hand. You will have greater visibility because all your income and expenses run through a single account.
Better financial visibility will also help you take full advantage of tax deductions without triggering an audit.
It lends credibility and an aura of professionalism to your business
Customers and clients will see your business as more trustworthy when you have a business bank account. Your brand will also have a more professional image since customers can pay with a credit or debit card, and checks are made to your business rather than to you.
It will limit your liability in a lawsuit
Your business bank account can provide you with limited liability protection. This is particularly relevant if your business is an LLC or corporation.
Setting up business banking will ensure your personal assets will not be negatively impacted if your business can’t pay its debts. If you fail to separate your personal finances, the court can “pierce the corporate veil” and hold you personally liable if your business is the subject of a lawsuit.
Even if you run a sole proprietorship, you should still separate your business finances from your personal funds.
What are the Features of the Best Business Checking Accounts?
The specific needs of your business will shape your decision-making. The list of features below highlights what you should look for when evaluating banks. The right bank for you will be the one that excels in offering all the features and services that meet the needs of your business.
Low opening deposit requirements
The opening deposit is the minimum amount you may be required to deposit when opening the account. The minimum account balance requirement varies from bank to bank. Some won’t even require any minimum amount.
A bank demanding an opening deposit may also require that you keep a minimum daily balance in the account to avoid a monthly maintenance charge. The best banks will keep the minimum balance low or eliminate the requirement entirely. You must familiarize yourself with the terms and conditions of each bank’s offer to ensure you won’t end up paying unnecessary minimum account balance fees.
Low fees
Most banks will charge you a fee for the maintenance of your business account. The amount depends on the bank, the services on offer, and the type of account. The monthly maintenance fee ranges from $12 to $50 each month.
Banks that offer more robust features and additional services (wire transfers, payroll services, no-fee transactions, third-party integrations, invoicing, etc.) tend to charge higher. However, there is no point in paying extra fees if you do not need those extra features.
Look for banks that offer low fees or even free accounts. Some banks that charge monthly fees may have an option where the fee can be waived if you meet certain conditions. This is particularly relevant when the bank offering the full scope of services and features you need for your business is charging relatively high service fees.
High transaction limits
There is often a limit on the number of transactions you can make with your business account. This includes electronic transactions and checks. Exceeding your allotted number of monthly transactions will attract a fee for each additional transaction.
Look for a bank that can accommodate your average transaction volume in each statement cycle, or one with high transaction limits to save money. For businesses that handle lots of transactions, you are better off with a bank that doesn’t impose any transaction limits.
High cash deposit allowance
Some banks will limit the amount of cash you are allowed to deposit into your account for free before they start levying a fee for each cash deposit you make.
This means there is an allotted amount of money you can put into your business account each month without attracting a fee, but once that threshold is exceeded, you will be charged for each subsequent deposit during that month.
Business owners that run cash-heavy businesses should look for banks that don’t charge fees for cash deposits or those with a very high cash deposit allowance.
Extensive ATM access
If you are into retail or you deal with lots of cash transactions, you should opt for a bank with an extensive network of ATMs in your geographical location.
You must also consider the following:
- Does your access include both cash withdrawals and deposits?
- Does the bank impose fees for using your business debit card out of the bank’s ATM network?
- Does the bank offer ATM fee reimbursements?
The right bank for a business that engages in lots of cash transactions will be easily accessible while also meeting all the three criteria listed above.
Nearby branches
This applies to businesses that deal heavily in cash. You will want to opt for a bank that has physical branches in convenient locations for you to make in-person deposits.
Access to a brick-and-mortar bank branch is not important to eCommerce businesses since you conduct all your transactions online. What you need is a bank that offers robust online banking features.
Robust online services
Online banking ensures you can quickly use a mobile app to transfer funds, deposit checks, and pay bills. You need to carefully consider the online banking features you must have to ensure your business runs as smoothly as possible.
Once you have a good idea of what you need, carefully evaluate the online banking services of each bank. The best ones will offer free online and mobile banking, including options for customizing your business banking.
High interest rates
Some banks offer interest-earning accounts. Such an account allows you to rack up interest on your business profits, but there is almost always a minimum balance requirement before you can qualify.
However, an interest-generating business checking account is not the best option if you are looking to save on a long-term basis. A business savings account is a better option since it offers much higher interest rates. Although, using a savings account is only practical when you don’t need daily access to your funds.
Ease of integration
You likely rely on third-party cloud-based software to help with accounting, invoicing, payroll management, and other financial matters. Your bank must seamlessly integrate with the platforms and software apps you use to run your business.
Internet-only banks tend to do third-party integrations much better than brick-and-mortar banks. But there are several banks with physical locations that also offer excellent online features.
Generous introductory offers and bonuses
A bank may offer an introductory bonus to incentivize you to choose them. This bonus often comes with the condition that you deposit and maintain a minimum balance in your new account.
An extra hundred dollars shouldn’t be the major driving factor in the decision-making process of entrepreneurs, but if a bank that meets all your criteria is offering you free money to sign up with them, there is no harm in taking the plunge.
How to Find the Right Bank Account for Your Small Business in Five Steps
You are now aware of what you should look for when evaluating bank accounts, so how will you use that information to arrive at the best option for your business?
Step 1: Know your banking needs
Small business owners must identify the specific banking services they need to ensure the smooth running of their business.
For example, it could be that online banking is essential to your business; you may need multiple business credit cards, or it could be that you value a personalized customer service experience. Itemizing your needs makes it easier to screen out banks that don’t offer the full scope of services you are looking for.
You should also be able to discern the perks and functions that you don’t need. You need the ability to make cash deposits, online payments, and adequate transaction volumes. But do you really need support for check writing services, incoming wire transfers, and access to a line of credit?
If you don’t currently need extras that will rack up fees for you to pay, then you shouldn’t sign up with such a bank right now.
Step 2: Shop around for the best business checking accounts
One key piece of advice we can offer you at this stage is that you shouldn’t automatically settle for the bank that handles your personal checking account. Indeed, you may already have a personal relationship with your current bank, but business and personal banking are very different.
Some banks can offer excellent personal banking services while offering less robust business banking services or charge higher fees for business accounts. This is not to say signing up with them is always a bad choice. It is best to talk to people and compare their offer with that of other banks. If they offer excellent services, then opening a business account with them will be perfect.
When checking out other banks, make sure you explore both online-only and brick-and-mortar options. Both types of banks offer many of the same services. However, you may find that online banks tend to offer lower fees and higher interest rates, while brick-and-mortar banks distinguish themselves with more personalized customer care.
You should also check out credit unions. Although they tend to have few physical locations and ATMs, most credit unions offer personalized customer service and low or no monthly fees.
Step 3: Evaluate the details of each offer
When going through the offer of each bank, you must pay particular attention to the fees that are charged by the account. Bank fees can open you up to unnecessary costs in the long run and bleed away at your cash flow.
Look for the best combination of merchant services and low fees where charges are unavoidable. For example, if you regularly receive wire payments you might want to settle for a bank that charges a flat fee for such transactions to save money.
The fees you need to pay attention to include:
- Discount rate (the amount charged per transaction)
- Transaction fees (the amount charged for card payments)
- ACH fees (the amount charged to settle your ACH transactions each day)
- Transaction limit fees (the amount charged if you exceed your allotted free cash deposits and transactions )
- Monthly minimum fees (the amount charged if you fail to meet the required average monthly balance)
- AVS fees (address verification charges)
Step 4: Prepare the documents you need
According to the SBA, you will need the following documents to open a small business checking account:
Sole proprietorship
- Employer Identification Number (EIN) or Social Security number
- Business license or passport (government-issued photo ID for personal identification of sole proprietors)
Partnerships
- EIN
- Partnership agreement
- Business name filing document
LLCs
- Social security number or EIN
- Articles of organization
Corporations
- EIN
- Articles of incorporation
Other documents you will need include:
- A DBA (“doing business as”) certificate or a fictitious name certificate
- Other business formation documents
- Organizing documents (they differ from state to state but they contain information about the business’ name, owners, business type, address, registered agents, and management structure.)
- The business’ TIN (tax ID number)
- A cash deposit or a check
Step 5: Open an account with your bank of choice
You have taken your time to weigh your options and avoided the mistake of jumping into a banking relationship without due diligence. Now it’s time for the last step where you will open and set up your business bank account.
After setting up your account, test everything to be sure the process was error-free. Check to see that deposits go through, the names on checks match your business’s legal name, and funds are coming in and out of your account without issues.
The 20 Best Bank Accounts for Small Businesses
As we said earlier, most of these banks offer similar services but each of them really stands out in a particular area. This list simply highlights the area where each is superior to other alternatives instead of providing an exhaustive list of the services and features offered by each financial institution.
1. Chase business complete checking account (best for full-service business banking [digital banking and branch access])
This account has the best full-service banking options offering multiple access points—ATMs, online, mobile, and physical branches. There is no minimum opening deposit required to open an account but you will have to pay a monthly service fee that is waived only if you meet certain account requirements.
2. Capital One (best for unlimited free transactions)
If you are looking for the best business bank accounts that offer unlimited transactions then look no further than Capital One business accounts. The bank has a robust ATM network and you get free access to over 70,000 ATMs. Although Capital One is a popular online bank, you will most probably have to visit a branch to apply in person.
3. Bank of America (best for ongoing rewards and lending options)
Their Business Advantage Banking account has one of the best Account Management services. For an additional fee of $15, you can integrate your account with apps like Google Analytics and QuickBooks. This allows you to monitor ongoing reward programs and the health of your business. They also offer lending solutions from Merrill Edge. One drawback is that they do not have 24/7 customer service.
4. U.S. Bank (best for businesses that need a basic checking account and freelancers)
For small businesses that need a basic business checking account, the U.S. Bank Silver Business Checking Account Package is a great option. There is no monthly maintenance fee and you can open an account online. As this is a basic account, it has very few features that are available with other business accounts.
5. Axos Bank (best for unlimited ATM fee reimbursements)
Axos Bank offers two types of business accounts—Basic Interest Checking and Basic Business Checking. With the Visa debit card that account holders get at Axos, you get unlimited domestic ATM fee reimbursement. As it is an online bank, they don’t have any physical bank branches.
6. Bluevine Business Checking (best for earning high APY on deposits)
BlueVine Business Checking account offers a 2% APY for balances up to $250,000. There is no monthly maintenance fee and you get two free checkbooks. You need to keep in mind that BlueVine has no physical bank branches and charges a fee for cash deposits.
7. Novo Business Checking (best for fee-free online business banking)
If you have an online business then the Novo Business Checking account could be the best option for you. You don’t have to pay a monthly fee and all ATM charges are refunded. This account can also be easily integrated with apps like QuickBooks. No interest is earned on balances and cash deposits aren’t allowed.
8. LendingClub Business Checking (best for cash back debit cards)
The debit card from a LendingClub Tailored Checking account gives you 1% unlimited cash back on all credit transactions. You also get unlimited free transactions and fee-free ATM transactions worldwide. If your balance is less than $500 then you do have to pay a maintenance fee of $10 a month.
9. Relay ( best for multiple accounts and debit cards)
Businesses with large and growing teams should consider Relay Financial. At no additional cost, you open up to 20 business accounts and 50 debit cards. You can also set the access levels of your team members with permission settings options. To import bills from tools like QuickBooks, you will have to upgrade to a Relay Pro account.
10. Mercury Business Bank Account (best for tech companies and startups)
A business account with Mercury is apt for tech companies and startups as they offer a unique Raise Funding program. Your company can get access to quarterly fundraising rounds hosted by Mercury that includes more than 500 investors. Mercury business accounts do not support cash deposits.
11. Wells Fargo
Wells Fargo is a top SBA lender, so a Wells Fargo Initiate Business Checking Account is great if you plan on getting loans for your business. You can upgrade to higher-tier business accounts but free monthly transactions are capped at 250 even for the highest tier.
12. Lili
The simplest business account in this list belongs to Lili. This financial platform is great for sole proprietors and freelancers and makes calculating taxes very easy. This feature is available only with the paid Lili plans.
13. Found
Found is well suited for those looking to simplify tax planning. This banking software has integrated tax and bookkeeping features that are helpful for new business owners when they do their taxes. Found isn’t a bank so there is no interest earned on savings.
14. TIAA Bank
This business account has been specifically created for single-member LLCs and you have to pay a minimum amount of $1500 to open one. TIAA Bank offers 0.5% APY allowing you to earn interest. One of the downsides of TIAA Bank is that most of its physical branches are in Florida.
15. nbkc Bank
Although nbkc Bank has only four physical branches, all in Kansas and Missouri, they charge very few fees. You don’t have to pay fees for monthly maintenance, statement generation, or even overdraft fees.
16. NorthOne Bank
This online-only bank offers a wide range of online tools to manage your overall business—right from sales to payroll. With NorthOne Bank, you not only get access to these tools but also unlimited free transactions. However, they do charge a fee for wire transfers.
17. Square Banking
Square Banking allows easy transfer of funds from your business checking account to subaccounts. They also offer a 1.75% APY and instant transfers to other customers of Square are free. One of the disadvantages is that they have a limit on ATM withdrawals.
18. Live Oak
A Live Oak business account allows you to earn a high interest as they offer an astounding 4% APY. There is no minimum balance requirement but the application process can be slow and tedious.
19. Oxygen
Oxygen business accounts are designed for the traveling LLC. They offer many travel benefits and you can even create your LLC via their mobile app. You can register for their basic tier, which is free, but you will have to pay enrollment fees to move to the next 3 tiers.
20. Comerica
With this account, the number of monthly transactions is limited to 300 and you must pay a monthly maintenance fee of $11 if you don’t meet their account requirements. However, they do offer services to manage payroll and automate bill payments.
Final words
We hope this article gives you more clarity on the importance of having the right business bank account. Now it’s up to you to use the information in this article to evaluate each of the banks listed above and settle on the one that best offers the complete set of services your business needs.
And once you have a business bank account, be sure to connect it to your payment processor to ensure a smooth transfer of funds. Stax enables you to do just that with our merchant-friendly platform.
FAQs about Small Business Bank Account
Q: Why is having a small business bank account important?
Owning a small business bank account keeps your personal and business finances segregated, improving the accuracy of your financial records. It enables a clear assessment of your business’s financial performance and lends credibility to your company. Having a separate business bank account can also offer limited liability protection, vital for businesses structured as LLCs or corporations.
Q: What are the features to consider when choosing the best business bank account?
Key features to consider include low opening deposit requirements, minimal fees, high transaction limits, high cash deposit allowances, extensive ATM access, proximity to physical bank branches, robust online services, high-interest rates, easy integration with other platforms, and generous introductory offers and bonuses.
Q: How can one decide what type of business checking account suits them?
First, identify your specific banking needs. Evaluate banks based on whether they provide the required services. Don’t necessarily choose a bank just because you have a personal account there. Alongside brick-and-mortar options, also explore online-only banks and credit unions due to their often lower fees and higher interest rates. Pay attention to any fees associated with the account and compare these across different banks.
Q: What are the best business bank accounts for small businesses?
Several financial institutions provide excellent business banking services. For instance, Chase Business Complete Checking Account is known for full-service business banking, and Capital One offers unlimited free transactions. Other noteworthy mentions include Bank of America for ongoing rewards and lending options, U.S. Bank for basic checking accounts, and Axos Bank for unlimited ATM fee reimbursements.
Q: Can I connect my business bank account to my payment processor?
Yes, after setting up your business bank account, you can connect it to your payment processor for a smooth transfer of funds. Some platforms, like Stax, offer merchant-friendly platforms enabling this connection.
Q: Are there any online-only banks that are suitable for small businesses?
Yes, certain online-only banks like Axos Bank, Novo Business Checking, and NorthOne Bank offer a wide range of features suitable for small businesses. They typically offer lower fees, greater ATM accessibility, and extensive online tools and services for managing your business.
Q: Can I earn interest on my business bank account?
Some banks, like Bluevine Business Checking and TIAA Bank, do offer interest-earning accounts allowing businesses to earn interest on their profits. However, there’s typically a minimum balance requirement to qualify. If you’re looking to save long term, a business savings account might be a better option as they usually offer higher interest rates.
Q: Can an online business benefit from having a business bank account?
Yes, an online business can significantly benefit from having a specific business bank account. For instance, the Novo Business Checking account offers excellent features for online businesses. It not only provides ATM charges refund but also allows easy integration with apps like QuickBooks.
Q: Are there any business bank accounts especially beneficial for tech companies and startups?
Certainly. The Mercury Business Bank Account is a good fit for tech companies and startups because of its unique Raise Funding program. This program offers the business access to quarterly fundraising rounds hosted by Mercury, including more than 500 investors.
