Small Business Checking: What You Should Be Looking For
A small business bank account is one of the building blocks of your company’s day-to-day financial activity. And one of the most important components of that account is small business checking, which allows you to easily pay and get paid.
Of course, because banking is such a basic service that all of us are familiar with through our personal expenses, some business owners don’t tend to give it much thought. They pick the first big-name bank out of a hat, maybe the local bank with the branch closest to them, and call it a day.
Big mistake.
There’s a wider gulf than you’d think between good small business checking accounts and not-so-good ones. We’re not just talking about features — we’re talking about costs, which over time can add up to a significant sum.
So, what should you look for as you shop around for small business checking? Here are a few traits.
Small Business Checking Accounts: 5 Things to Look Out For
1. Fees
Fees aren’t the only thing you should care about, but they’re one of the first things you should learn about. If all else is equal, a small business checking account that costs you $300 a year across various use fees is better than one that charges you $600.
It can be confusing, though, because there’s no all-in-one fee. Banks instead charge you through numerous types of fees, so when researching a small business checking account, see if they charge:
- ATM fees
- Overdraft fees
- Minimum balance fees
- Monthly maintenance fees
- Paper statement fees
- Wire transfer fees
A quick note: If you don’t need physical branches to conduct your banking, consider an online bank. Online banks tend to be lighter on fees than traditional banks.
2. Account Features
Of course, when you’re comparing accounts, you’ll find that all small business checking accounts aren’t created equal. Some accounts let you do a lot — and some only let you do a little.
How much that matters depends on which features are important to you. Among the features to consider:
- Paper checks: Some online checking accounts are tethered to debit-card use and don’t offer paper checks.
- Debit card: What network does it use (Visa, Mastercard, other?), does card use generate cash-back or other rewards?
- Online banking
- Mobile app
- Automatic bill pay
- Wire transfers
- Connected savings account: Depending on whether you want to generate yield from your savings, you might want to ensure your bank offers other products, including CDs and money market accounts.
Zooming out a little bit, you’ll also want to consider the bank’s other offerings. For instance, sometimes you’ll get better terms on things such as business loans and lines of credit if you keep all your banking in-house.
3. Bank Branches and ATMs
Speaking of fees and features: You’ll also need to determine how important physical banking is to you.
There are two primary situations in which having nearby branches and/or ATMs is necessary/useful for your business:
- You deal best with in-person customer service.
- You have a lot of cash and/or paper-check transactions.
Again, don’t forget to look into ATM fees. Most banks don’t charge fees for their own ATMs — but that’s not necessarily useful if they only have a handful of machines. If they do have a small network of ATMs and you’ll need to hit up the cash machine often, make sure they offer a healthy amount of ATM fee reimbursement.
4. Interest Rates
This feature is more important for savings accounts than checking accounts, but you’ll still want to see what, if any, yield your account generates on balances.
This might have been a paltry sum a few years ago. But rising interest rates have resulted in much more generous annual percentage yields (APYs) lately.
5. Sign-Up Bonuses
Along the same lines as fees: If all else is equal, go with whatever small business checking account has the best handouts. This will typically involve a cash bonus tied to a certain size of deposit or transaction threshold within a certain introductory period.
Need Help With Your Small Business Banking Needs?
Small business banking is a bigger deal than most people give it credit for. So if you’re not sure where to go, don’t just guess — ask a pro!
McManamon & Co. is an accounting, tax, fraud, forensic and consulting firm that serves small and mid-size businesses. And our consulting services span the gamut — including helping you figure out what you need in a small business checking account. Call us at 440.892.8900 or contact us online today.
Tags: McManamon, small business, small business bank account, small business banking | Posted in McManamon & Co., small business, small business banking