Advice on choosing the best checking accounts for your business

Do choose a checking account that best fits your business

Every bank or credit union offers a variety of services and products when you choose to bank with them. However, not every banking experience will be the same, so how you choose the institution and checking account should depend on what your business needs.

What do you need for your business? Online banking, debit cards for just yourself or employees, or a line of credit? Determine how many checks you expect to write per month, and if any of your sales will be interstate or international.

Consider your current monthly activity and your projected growth. Will you stay small for some time and keep your average monthly balance at $5000 or less? $10,000 or less? More?

Your rate of business will directly affect your rate of banking. Keep in mind that some banks and credit unions might charge you for too much or too little banking activity (according to their standards) depending on the checking account you open.

Do shop around for the lowest fees and minimum balances

Some institutions—especially credit unions—offer discounted fees on business accounts. Others may charge you fees every time you put money in or take money out. Every bank or credit union will have different fees or incentives for a checking account’s balance. Some may waive fees at times and under their chosen criteria. Confirm whether or not you will be able to afford any fees that apply to you, or if you will be able to avoid fees by maintaining your banking practices within the boundaries the bank or credit union sets for you.

Do sign up for free online banking

Online access to your business account makes it easier to track your balances and transactions—even in the middle of the night. Enroll in a bill-paying service and you can avoid check charges. However, when shopping for the right banking institution and checking account, make sure you like their online banking services from your desktop computer to your smartphone.

Do look for benefits such as a mobile app

Want to deposit a check without going through the drive-thru? Want to know if a customer’s check cleared? You can do that quickly with your mobile phone or tablet using an app from the financial institution. Just make sure that the bank’s mobile app provides the features you want and that it’s easy and enjoyable to use.

And with mobile devices or online apps, security is very important. Make sure that your password is very strong, and never share it or write down in an unprotected location.

Do find an institution that can grow with your business

Your company may be a one-man shop today, but in a few years, you could have 100 employees. Rather than outgrow your institution, look for one that offers merchant services, business loans, lines of credit, and corporate credit cards. However, if you aim for this and choose an institution that will allow your business to grow, be sure to reevaluate every year or so. Make sure your banking institution is still as competitive and beneficial to you and your business as it was at the beginning with your first transaction.

Do not get stuck with a high minimum balance requirement

Some institutions require that you keep an average monthly balance of $15,000 or more, for example, to avoid being socked with fees and charges. These minimums can be absurdly high for a small business that has just started. You don’t want to tie up cash that could go towards growing your business.

Do not jump at a promotion such as a rate or cash bonus

Always read the fine print. That high-rate offer may be good only for a few months, after which it plummets to almost nothing. That free cash? It probably comes with strings attached. Promotions happen to gain your attention, but they shouldn’t automatically gain your business.

Do not get tangled up in account restrictions

A banking institution may limit the number of deposits or checks you can write in a monthly cycle without being charged additional fees. You don’t want to pay extra just to transfer money from your checking account to your payroll account. Once again, read the fine print, and don’t sign up for an account that proposes fees for stepping outside of its boundaries unless you’re happy to pay them for those “extra” services.

Do not agree to move all your accounts

Some institutions want all your business and might ask you to move your other accounts over to them—from individual checking and savings accounts to credit cards, even mortgage and auto loans. If they make it sound like you’ll have a better banking experience that way, or that you have to move your other accounts over to them in order to open a business account, consider finding another place to go. The terms and conditions on a business account may be vastly different on a personal account, and that move may cost you more than you bargained for in the long run.

Do not be fooled by free merchant services tied to the checking account

An institution may offer you a credit card reader for your cash register or mobile phone. It’s free with a combination of a business checking account and merchant account. Be careful, and don’t get locked into a long-term contract. If something happens to your old equipment, you may not be eligible for a replacement because of contract restrictions.