Business Checking Fees: A Beginner’s Guide

Business checking accounts differ markedly from personal checking, and the fees can be far more complicated. But if you understand the basics of business checking fees, your company might be able to minimize or avoid them altogether.

Here’s a look at three of the most common fees.

Monthly service fee

What it is: A charge that occurs each month the account is open.

How much it is: The nation's largest banks typically charge $8 to $12 a month.

How to avoid it: Many banks offer free business checking accounts.

You can also select a business bank account at a bank where you meet the average balance requirement to waive the monthly fee. A typical bank requires an average daily balance of about $1,500 to avoid this charge. Some banks will also waive the fee if you meet other conditions, such as making a minimum number of debit or credit card purchases each month.

Excess transaction fee

What it is: A fee for each transaction you make over a monthly maximum.

How much it is: At the 10 largest banks, fees range up to 75 cents per transaction.

How to avoid it: Come up with a ballpark number of transactions your small business will make each month. These include checks you write, debit card transactions and ATM deposits. Then look for a bank account that allows that number of transactions without charging extra fees.

Most of the top 10 U.S. banks by deposits have a 200-transaction limit on their basic business checking accounts before fees are charged. At banks that offer business checking accounts with no monthly fee, the transaction limit tends to be lower, often around 100. Online business checking accounts, on the other hand, typically include unlimited transactions.

Cash handling fee

What it is: You can deposit only a certain amount of cash at many banks. After that, you’ll be charged a fee to process all those bills and coins.

How much it is: Usually about 20 cents to 30 cents for each $100 you deposit above the cash handling limit.

How can I avoid it? Estimate how much cash you’ll deposit each month. Then choose a checking account with a higher cash handling limit.

You'll have an easier time avoiding fees if your small business doesn't have a ton of cash transactions. But if you do handle a lot of cash — you own a restaurant or a convenience store, for example — you could lower your costs by shopping around.

Say you own a deli and expect to deposit about $10,500 in cash each month:

• Option 1: Bank A allows up to $7,500 in cash deposits a month and charges 30 cents for every additional $100 you deposit during a statement period. You're $3,000 over the cash deposit limit. Since you’re charged 30 cents for each $100, you’d multiply 30 cents by 30. Your cash handling fee would be $9 for the statement period.

• Option 2: Bank B allows $5,000 in cash deposits and charges 25 cents for every additional $100 you deposit during its statement cycle. You have $5,500 in excess cash deposits. Since you’re charged 25 cents for each $100, you’d multiply 25 cents by 55. That’s a cash handling fee of $13.75 for the statement cycle.