What to look for in a business checking account

When you see an advertisement for a “free” business checking account, most of the time it’s not entirely “free.” After all, for these banks to stay in business, they have to make money off of you somehow!

A top priority in our list was to include banks that offered competitive business checking accounts for freelancers, small business owners, entrepreneurs, and growing businesses. Business checking accounts typically won’t provide account holders with an opportunity to earn interest and they’ll charge slightly higher fees, so our list focuses on those banks that keep their fees to a minimum and also highlights some that offer interest.

Even so, it’s important to always read the fine print before signing up for a new checking account. Here are the most important features to consider in a business checking account:

Balance and deposit requirements

Some banks charge a monthly fee if your business checking account’s balance falls below a certain threshold. It’s calculated on an average, by day, so as long as you’re maintaining a certain level of money in the account you should be fine. A bank may also require a minimum initial deposit, which may disqualify you from opening the account if you don’t have the money available.

On the flip side, some banks will actually reward you for having a high balance, much like they do with a personal checking or savings account (typically a higher interest rate). With business checking accounts, you may get a higher interest rate or even a reduction (or elimination) of some fees by carrying a large balance.

If you don’t see anything in the fine print about high-balance bonuses, then contact a service representative to see if they’re willing to give you a break if you agree to keep your balance above a certain amount.

Monthly maintenance fees

Monthly maintenance fees don’t exist with every business checking account. And those that do require a monthly fee may offer account holders an opportunity to waive the fee (typically by maintaining a minimum account balance). On average, these fees are typically $10-$15, but in some cases, they can jump as high as $50.

Before you sign up for a business checking account, confirm if there’s a monthly maintenance fee. If there is, see if there is an option to waive the fee by maintaining a minimum account balance or ask to have the fee waived.

Monthly transaction limits

With a business checking account, most banks will put a limit on the number of transactions you make every month. Seems kind of backward, doesn’t it? With a personal checking account, you’re often encouraged to make unlimited transactions, not limit them.

Limits placed on account transactions also don’t apply to just debit card charges. It usually includes things like deposits (both check and cash), withdrawals, checks written, and payments you make electronically.

Most banks will put a limit of up to 500 transactions, depending on the bank. On average, though, you typically won’t see a limit below 100 transactions per month. Expect the fees to be as high as 50 cents per transaction over the stated limit. That’s like a 25% surcharge on a $2.50 coffee.

It is possible to find unlimited transactions with a business account, but not easily. Some banks may offer an unlimited transactions option for a higher monthly fee, or you could find a bank that doesn’t have a limit on transactions at all. However, you’ll likely have to pay a higher monthly fee if you go that route. Alternatively, you could keep track of your transactions and stay below the allotted amount each month to avoid paying any monthly fee requirements.

What are the benefits of having a business checking account?

1. It keeps your personal and business finances separate

While technically (and legally), you can use a personal bank for your small business, it isn’t recommended.

That’s because mixing the two can make it difficult to track your income and expenses. And if you accidentally pay personal expenses from a business account, those expenses are subject to taxes and can convolute your books.

It’s best to have a separate, business-only bank account where you can do all of your business banking and ensure it’s kept separate from your personal finances.

Read more: How to separate your personal and business finances (and why you should)

2. It can help you manage your cash flow more effectively

Cash flow is the lifeblood of any business. If you can’t manage your cash flow effectively, your business will inevitably fail. That’s why finding the best business checking accounts is so important — so you can keep track of your incoming and outgoing cash. With these checking accounts, you can easily track your expenses and income, which can also help you get a loan for your business, if needed.

3. It can help you build business credit

One of the most important things you can do for your business is build credit. When you have good business credit, you’ll have a better chance of qualifying for a loan or line of credit should you ever need them. It can also help you get better terms on those loans.

One of the best ways to build business credit is to open a business bank account. When you have a business bank account, it shows that you’re a legitimate business and helps build your credit history. If you’re thinking about opening a checking account, make sure you choose a bank that reports to the major credit bureaus, so you can build your business credit history every time you make a deposit.

Read more: How to build and establish business credit

4. It can offer additional perks, such as rewards programs or interest-earning potential

The best business checking accounts will also often offer additional perks that can help your business. For example, some banks offer rewards programs that give you cash back or points for every purchase you make. Others may offer interest-bearing accounts, which can help you earn money on your deposited funds.

What do you need to open a small business checking account?

There are a few requirements you’ll need to open a business checking account, which may (or may not) include:

  1. A business license or incorporation documents – The business account will need to be opened in the name of your business. This is why it’s important to have your business license or incorporation documents handy.
  2. Your Employer Identification Number (EIN) – Your EIN is a nine-digit number that is assigned to a business, also known as a federal identification number.
  3. A government-issued ID – Your driver’s license will typically meet this requirement.

The bottom line

It shouldn’t matter if you’re an established small business or a brand new blog. If you have a business, you’re a business owner. As such, you should find one of the best business checking accounts on the market to keep your personal and professional finances separate.

Every business has different needs, and every bank account offers different services and features to meet those needs. Before you sign up for a business checking account, be sure to do your research. Look for details like fees and transaction limits. See if you can find an account that offers interest or cash back. Consider multiple options to make sure you find the account that best suits your business.

Featured image: Cast Of Thousands/Shutterstock.com

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About the author

Photo of MoneyUnder30 writer Kate Van Pelt
Total Articles: 52
Kate Van Pelt is a writer and editor based in the Pacific Northwest. She has a bachelor’s degree in business management and English and has established her professional career in marketing and research writing. Since 2015, Kate has created educational materials covering a variety of financial topics, from home loans and credit cards to retirement accounts and estate planning. She spends her free time thrift shopping, making cocktails, and enjoying the outdoors with her dogs, Vira and Elmer.