The Right Business Checking Account

One of the first things you do as a business owner after filing your incorporation papers or your assumed name certificate is open your bank account, otherwise you might have a hard time getting paid, and yes, you need a separate business checking account. However, the world of business banking is completely different from consumer banking and can cause a new business owner considerable frustration at the start of the business.

When it comes to your business banking it first seems much like consumer banking. Do you want to bank with a large national institution, a friendly hometown community bank, or a neighborhood friendly credit union? This choice might be simplified to some extent if you already have two or three accounts with a bank, but if you have just one account you might not feel so tied to a specific financial institution.

However, once you get past this step the water gets kind of muddy.

Almost every bank will offer four to six types of business accounts ranging from checking, to savings, to interest checking, and even cash management accounts. Community banks will almost always charge you a monthly fee ranging from $6 to $15 per month if your balance falls below a certain amount.

Where I live in Texas I recently surveyed three local banks and here is how their accounts for a freelance or sole proprietorship type business look.

• Bank A: Minimum to open $300, minimum balance to avoid monthly fees $2,500, monthly fee if balance falls below this amount $8.95.
• Bank B: Minimum to open $200, minimum balance to avoid monthly fees $1,000, monthly fee if balance falls below this amount $10.
• Bank C: Minimum to open $250, minimum balance to avoid monthly fees $3,500, monthly fee if balance falls below this amount $15.

Compared to the national banks in town such as Bank of America and Chase, just to name two, these local banks have no way for a business owner to avoid the monthly fees unless they leave a large amount in the account, which would require you to produce business on a regular and consistent basis with relatively low expenses in your business, which isn’t really difficult, but the fees could hurt you when first starting. One of our local credit unions is preparing to offer business accounts, and true to the credit union philosophy the accounts will have no fees — which is a good thing if you are a credit union member.

A business associate of mine banks with Chase and as long as he uses his debit card at least five times a month for any amount he pays no fees. Bank of America does the same thing, but only requires one use of the debit card each month.

In planning to start your business investigate your banking options just like you would for a personal account, and I would also suggest speaking with your local Chamber of Commerce for suggestions. Know someone with questions about choosing a business checking account? Help them out by tweeting this post!

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