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As a small-business owner, every decision you make affects the bottom line. Choosing the right bank for your business accounts is no exception. Here are a few key questions to ask before selecting a new bank.
Personal vs. business accounts
As a new business owner, the distinction between these two types of accounts can be confusing. Two things to consider:
Transaction caps: Business checking accounts may place limits on the number of monthly transaction and total cash deposits, whereas personal accounts generally do not.
Additional fees: Accounts with transaction limits will also incorporate fees for exceeding them.
These factors mean that small-business owners have a lot to lose — or gain — by selecting a particular account. Ideally, a new business checking account should closely fit your needs and banking habits to reduce the impact of fees.
Transaction fees, cash deposit limits and other charges can add up in a major way and may be tough to predict. When choosing a bank, keep in mind:
How will this bank accommodate you during slow months?
During busy months, will you be able to afford overage fees?
Does your business deal more with cash, checks, or credit cards?
Does your business operate in a district that may need a courier service for larger deposits?
How will you make most transactions?
Just as with personal bank accounts, there are a variety of services and tech solutions to help make banking simpler for both parties.
Online banking and mobile banking have exploded in popularity over the past few years. These two services are highly important when establishing a new banking relationship since they will allow you to keep track of your business account balances and transactions at all times, and from any location.
An even more valuable tool for business owners is the ability to make deposits from home or office. Though it is less widely available, many banks and credit unions offer remote check deposits via a mobile app or computer scanner. If your business deals frequently in paper checks, this type of service could cut out countless trips to the bank. On a similar note, online bill pay services help to reduce paper waste and automate recurring payments.
To be clear, these features aren’t necessarily essential for all business owners. If your company highly values interpersonal customer service, then smaller bank with nearby branches is for you — mobile app or not. However, if you travel a lot for your business, or run a tech-heavy operation, the convenience of automatic deposits and transactions on the go will boost the utility of such self-service options.
Will you need other business services?
Banks and credit unions may offer additional services to cater to business owners. Through key partnerships, some institutions offer payroll and employee benefit services, merchant card processing solutions, and even tax preparation assistance at a discount when linked to a business bank account. Though this shouldn’t stop you from comparison-shopping for the best services at the lowest cost, you may find that partnering with your bank provides for a smoother interaction.
What are your borrowing needs?
Small-business owners will find it easier to secure financing from a local bank, typically at a lower interest rate than national chains. Smaller banks and credit unions want your business and will show flexibility if you have a good working relationship.
Other business resources
Many resources like the U.S. Small Business Administration’s website (SBA.gov) help small business owners connect with “other small business owners and get advice on starting, growing and managing your business.” The website offers blogs and posts concerned with everything from offering advice on starting your business, to loans and grants, filing and paying taxes, and even advertising. Knowing your business and bouncing ideas off others is a great way to develop a strong business plan and identify which financial direction you want to take.