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As a new or aspiring business owner, you may wonder when the right time is to open a business bank account. According to the Small Business Administration (SBA), you should open a business bank account “as soon as you start accepting or spending money as your business.” Having a business bank account will help you stay legally compliant and protected.
What Are the Benefits of Having a Business Bank Account?
Having a business bank account provides the following benefits:
Opening a business account can help you avoid a lot of headaches with the IRS. It also protects your personal finances in the event of a lawsuit and helps you maintain a professional image with your customers.
How Do I Choose a Business Bank Account?
Although you may be tempted to simply walk into the closest bank and open up a business bank account, it’s better to research several banks before deciding which one to go with. Every business has its own unique needs which is why the bank account that’s best for one company, may not be as good for another.
When choosing a business bank account, think about what you value in a financial institution, what features are most important to you, and what your future growth plans are for the company. Does your business do a lot of cash transactions? Do you need access to mobile banking while you are on the go? Are you planning on scaling? There are many things to consider, but here are a few of the most important ones:
Minimum Balance Requirement
Each bank is different so be sure to find out what the minimum balance requirement is at the one you are considering before you make your decision. Some banks require you to keep a specific amount in your account at all times in order to avoid certain fees. This is an especially important point to be aware of if your balance fluctuates throughout the month.
Branch and ATM Locations
If you’ll be visiting the ATM or the local branch of your bank frequently, make sure you choose one close to your home or office. Furthermore, if you do a lot of business travel, you may want to select a larger financial institution that has branch locations in multiple states and/or countries. Finding a bank with a broad ATM network and a lot of physical branches will help you avoid expensive out-of-networks ATM surcharge fees and allow you the convenience of being able to deposit checks or cash wherever you are.
When researching banks, remember to inquire about maintenance fees (some banks waive these fees provided you maintain a minimum balance), transaction fees, overdraft fees, ATM fees (for withdrawals at other financial institutions), and fees for wire or ACH transfers. Transaction fees and limits are especially vital to consider if you plan on growing your business. As you scale, you’ll need to do more transactions, so think about how much it will cost if you begin to exceed the allowed limit.
Online and Mobile Banking
Not all online banking is created equal. Some online banking services vary and may or may not include the ability to check account balances, pay bills online, make transfers, and do mobile check deposits. If the convenience of a mobile banking app is something that you’ll likely be using on a regular basis, make sure to choose a bank with an app that is easy to navigate and has the features available that you need.
When shopping for a business bank account, take your time and do your homework! There’s a lot to consider when comparing the various options.
For more small business resources from SBG Funding, click here.
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