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How to choose the right business checking account

March 29, 2023

When opening your business’s first checking account, there are several features you’ll want to factor into your decision, from convenience and integration to flexibility and growth opportunities.

When starting out as a business owner, one of the first items on your to-do list should be to open a separate checking account. A business checking account allows you to make payments and receive money in an environment separate from your personal finances. Having all your business-related transactions in one place makes it much easier to organize payment information and manage cash flow.

Business owners of all varieties (even gig workers) would be wise to open a business checking account. Separating your personal finances from your business income can also legitimize your business, as customers generally feel more comfortable paying an institution rather than an individual. The financial visibility you get when you separate finances ultimately gives you more time to focus on your business instead of organizing your bank statements.

Factors to consider when choosing a business checking account

If this is the first bank account you’re opening for your business, not only do you have to choose a checking account type, but you also need to decide which institution to bank with. Keep in mind that your choice may depend on the way you do business. For example, if your company accepts cash payments, your bank will need to be physically nearby and provide a safe deposit box. Or, if your business operates outside of normal working hours, make sure your bank has 24/7 customer support. Keep the specifics of your business needs in mind as you review these key features to look for when choosing a business checking account:

1. Partnership now and in the future

When choosing a bank to manage your business income, you want to look for a partner who both supports and understands your situation. Before signing up for a checking account, ask to speak to a business banker. Do they understand your market or the needs of a small business? What other resources do they have available for business owners?

You’ll want to ask about future needs, too. What options do they have if you need emergency funds? Ask about opportunities to integrate your operations with their tools. Does the bank offer payment services, such as a point-of-sale system? Are there ways to easily migrate information to your accounting tools? Look for ways your relationship with your bank can benefit your business, rather than complicate it.

2. Opportunities to grow

The financial needs of your business are only going to grow as it matures. Think ahead when choosing the right checking account. What savings accounts are offered? What interest rates are offered? With high-yielding account options, there may be opportunities to earn interest. However, be sure to weigh the interest saved against any extra fees you might have to pay.

3. Limited fees

Protect every penny by being aware of any fees associated with your business checking account. There are a number of reasons accounts get struck fees, including funds dipping below the minimum required balance, over drafting of funds, using unaffiliated ATMs and closing your account; you could also get a fee simply for account maintenance.

Before making your decision, do a rough estimate of how much money you plan on keeping in your business checking account. Sometimes maintenance fees associated with the account are waived when you keep a minimum balance, so be sure to ask about all stipulations and rules associated with the account.

Avoid debit card fees

Make sure any checking account you open comes with a debit card that allows you to withdraw and deposit money from the bank’s ATMs for no additional fee. Your checking account should also come with checks that you can deposit in person or via a mobile app. While having physical checks on hand may seem outdated, it’s better to be safe than sorry. According to Peter Fitzke, senior product manager of Business Banking at U.S. Bank, “More than 50% of our business customers utilize checks as their primary method to both send and receive payments from their customers.”

Factor in transaction limits

Most checking accounts limit the number of transactions you can make within a specific period. What usually happens is that if you exceed your limit, you will be charged a fee. Consider the way your business operates — how often do you estimate you’ll be making purchases or withdrawals? Be generous with your estimate for added wiggle room.

Overdraft protection

Speaking of fees, some banks are starting to waive overdraft fees and many checking accounts come with overdraft protection, which can shield you from added charges. Overdraft protection works by adding a backup source of funds in the event that you withdraw on your checking account.

4. Digital banking options

In today’s busy market, banking is often done on the go. When choosing a bank to open a business checking account with, look for one that provides mobile and online banking to make managing your finances as convenient as possible. Your bank should have an app or mobile-friendly website that allows you to view statements, scan and deposit checks and pay bills virtually.

5. Automated banking tools

As a business owner, you’re keenly aware of how true the phrase “time is money” can be. Automating tasks is one way business owners can get some of their precious time back, such as automating reoccurring payments. With automation, business owners can skip manually taking care of repetitive day-to-day activities and can instead devote that time to higher yield tasks such as planning business strategy or marketing initiatives. While you may not see an immediate need for automated tools, access to them should be a factor in your decision when choosing a business checking account.

The best business checking account

In summary, these are the key features of a good business checking account:

  • A minimum balance requirement that aligns with your projected cash flow. 
  • Digital banking options, such as an app or mobile-friendly website. 
  • Automated banking tools.
  • Minimal fees associated with the account in relation to interest rates.
  • A debit card with no additional fees, along with checks available for deposit.
  • Partnership opportunities to grow in the future, including integration-ready tools and interest-bearing account options.

The bank you open an account with will likely offer multiple checking options, from solutions for small businesses to nonprofit business accounts. The biggest differences between business checking accounts are transaction limits and fees. Weigh these features against your projected financial needs when making your decision.

How to open a business checking account

Once you’ve chosen the account that works best for your business, it’s time to apply. Regardless of whether you open a business checking account online or in person, you’ll be asked to provide some documentation, including:

  • EIN: You’ll need your business’ Employer Identification Number (EIN) or tax ID number, or your Social Security number if you’re the sole proprietor. 
  • Organization articles: This includes Articles of Incorporation, Articles of Organization, or a charter or a similar legal document that indicates when your company was formed; this is not required for sole proprietors. 
  • Identification: Government-issued photo ID and Social Security number for you and anyone else authorized to sign checks or make transactions on behalf of your organization.

Still can’t decide which checking account is best for your business? Get a recommendation by taking this quiz, or visit your local U.S. Bank branch to talk to a banking expert.

When starting a business, choosing the best business checking account doesn’t have to be complicated. Being informed about your business’s finances and features of account offerings will help you make the best decision with confidence.

Learn more about U.S. Bank business checking accounts to find what’s right for you.

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