Business Checking Accounts – Everything You Need To Know

Business Checking Accounts – Everything You Need To Know

Business Checking Accounts – Everything You Need To Know

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Whether you’re starting a new business or trying to grow an existing business, a business bank account is essential. Learn how to find and choose the best business checking account for your business. 

Why you should have a business checking account for your business

Whether you’re a freelancer or small business owner with employees, it’s essential that you open a business checking account to manage your income and expenses. It can help in myriad ways:

  • Separate business and personal expenses for accounting purposes, 
  • Help protect your legal business entity.
  • Increase financing options, as some lenders won’t consider lending to businesses without a business bank account. 

Check out our picks for some of the best business checking accounts for 2022 to find the account that meets your business needs.

Axos Basic Business Checking

If you’re looking for an online business bank account with low fees, Axos is worth checking out. It often wins awards for its innovative and customer-friendly online banking services, and its accounts for small business owners are appealing for those looking for an easy, low-cost online bank account. 

Small Business Checking by Bank of America

With thousands of locations and ATMs around the country, Bank of America is a popular pick for small business owners who value the ability to get in-person banking assistance when they need it. 

Bank of America’s business checking options are robust and have plenty of perks, but be aware that the monthly fees can be high unless you carry a high enough balance or meet other requirements to qualify for a fee waiver. 

BlueVine Business Banking

Bluevine Business Banking was built to empower small business owners with innovative financial solutions. They make it easy to get paid, send payments, track balances, and stay on top of cash flow. It offers free business checking with one of the highest interest rates. 

Chase offers outstanding options for business owners of all sizes. As a Chase customer, you have access to 16,000 ATMs and more than 4,700 branches. Customer service is available 24 hours a day, seven days a week, so you can always get help with your accounts when needed.

Chase also offers same-day deposits with QuickAcceptSM allowing your business the option to free up the cash you need to keep your business moving forward with same-day deposits at no additional cost. Your account also features unlimited electronic deposits, ACH and Chase Quick DepositSM

The Chase Mobile® app is robust and you can also set up alerts to help you stay on top of your account activity.  Mobile banking options make it easy to handle your finances while you’re on the go; you can deposit checks directly from your phone. 

NorthOne

NorthOne is a simple and fast business checking account. For $10 a month, account holders get access to mobile ACH, wires, deposit funds from approved checks, and can withdraw cash from any MoneyPass ATM nationwide. 

  • No hidden fees
  • No minimum balance
  • No charge for ACH payments

NorthOne’s app allows business owners to get insights into their business revenue and spending. They can also integrate their NorthOne Account with the accounting, ecommerce, and point-of-sale software they use every day, including Amazon, PayPal, Shopify, and Stripe. Small business owners can open a NorthOne Account in as little as 3 minutes.

Online & Mobile Small Business Checking by Bank Novo

Novo’s free checking allows you to minimize fees with zero minimum balance requirements.

  • No hidden fees,
  • No monthly fees,
  • No minimum required to open an account ($50 requested),
  • Free ACH transfers, mailed checks and incoming wires

Novo allows you to integrate with the business tools you already use, like Xero and TransferWise, and provides a dashboard to see the financial health of your business at a glance. You can apply for an account in under 10 minutes on any device so you can start managing your business finances all in one place and on the go.

Business checking FAQ

1. How is a business checking account different from a personal checking account?

A business checking account works like a personal checking account but the business is the account owner. Most accounts automatically include a business debit card. 

When applying for a business checking account you’ll need to provide information about your business as well as personal information. The bank must verify your identity to comply with banking laws, and a personal credit check may be required. 

If the bank advertises, “member FDIC,” deposit accounts will be protected by FDIC insurance, up to FDIC limits. 

Note that credit unions and community banks also offer small business checking and may be a good fit for your business. Since credit union membership is limited, you’ll need to find which credit unions are available to you. This credit union locator can help. 

2. What should I look for when choosing a business banking account?

For most business owners, the choice of a small business account falls under two main categories— cost and convenience. You’ll have to think through which features are most important to you, as well as what fees you want to avoid. 

Convenience

  • For in-person banking, where are branches located and what hours are they open?
  • For online banking, how easy is it to open an account? What features are available through the mobile app?
  • How easy is it to reach customer service in the case of problems?

Cost

  • What types of fees will be charged and can you avoid them?
  • Will you carry a large enough balance to avoid monthly maintenance fees?
  • Do you expect to have a lot of ATM transactions, and if so, how can you avoid fees?
  • Can you earn interest on your deposits? 

3. What bank has free business checking?

A number of banks offer free business checking though they may require you to maintain a minimum balance or link your account to other bank-offered services (such as a line of credit or credit card) to avoid fees. In addition, there will often be a certain number of free transactions but once you exceed that amount there will be transaction fees. 

You should be able to find a business checking account that meets your banking needs by reviewing the options listed in this article. 

4. Who needs a business checking account?

If you’re a freelancer, entrepreneur, or small business owner, you need to have a business checking account that is completely separate from your personal bank accounts. Not only will it make bookkeeping much simpler, but it will save you from a lot of headaches at tax time. You can sync your account with a program like QuickBooks or Freshbooks to make tax preparation a breeze. 

5. What do I need to open a business bank account?

In many cases, you can open a business bank account online. However, there are some banks that will require you to apply in person at a bricks-and-mortar branch. In either case, you should have the following information handy to open a small business checking account

  • Your Taxpayer Identification Number or Employer Identification Number
  • Identification, such as a driver’s license
  • Business license, if applicable
  • Organization documents filed with your state
  • Fictitious name certificate (“DBA”) if applicable
  • IRS letter of 501(c)3 status (for non-profits)

6. How do you qualify for a business checking account?

Requirements for opening a business checking account vary but most will require documentation to verify the business, and some will require a personal credit check. Note that if you have a credit freeze on your personal credit reports (including ChexSystems) you should check with the bank before you apply for your checking account. You may need to release the freeze before you apply. 

Keep in mind businesses in certain industries may have trouble opening an account. These are often referred to as “restricted industries.” Common examples include cannabis distributors or dispensaries, cryptocurrency, internet gambling businesses, money service businesses, or companion services.

7. Do you need an LLC to open a business checking account?

You can open a business bank account as a sole proprietor (not LLC, C Corp or S Corp). If you operate your business as a sole proprietorship you may find it a little more challenging to open an account, but it is not difficult and you should not get discouraged. 

Get an Employer Identification Number and keep a copy of the letter the IRS sends you with that number. (It’s called a 47c Letter). Obtain necessary business licenses to establish the legitimacy of your business. Also keep in mind that you may need to provide proof of your home address or another physical location if you are using a PO Box as your business address. 

Fees and limits to watch out for when choosing a business checking account

When you’re looking at options for a business checking account, pay attention to the bank’s fees and account balance minimums. There may be a variety of transaction fees, including monthly maintenance fees, ACH fees, cash deposit fees, NSF fees, or excess transactions (checks, deposits etc above a certain limit). Fees can cut into your profits, so make sure you know what fees are involved and how to avoid them. 

If your business will have a lot of cash transactions you will want a bank with convenient branch locations for your deposits. If not, you’ll want to make sure the account has a good mobile app so you can make mobile check deposits or complete other transactions conveniently. 

Opening a business checking account

If you’re a small business owner or entrepreneur and you don’t yet have a separate bank account, make opening a business checking account a priority in 2022. Not only will it help you appear more professional, but it will also make managing your finances much easier. 

By doing your homework, comparing fees, and reviewing minimum balance fees, you can find the right business checking account for you and your goals. 

This article was originally written on September 10, 2019 and updated on April 18, 2022.

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