If you’re looking to start a business or are already running one, a business checking account is worth considering. Business checking accounts can help you separate your business finances from your personal finances.
You just don’t want a business checking account but one with little to no fees that’ll not eat into your profits and hurt your company’s bottom line. In this post, we’ll cover everything you need to know about free business checking accounts, things to consider when choosing one, and how to open one.
What is a Business Checking Account?
A business checking account is a type of bank account specifically designed for businesses to manage their finances. It functions much like a personal checking account, but it’s used solely for business purposes.
Business checking accounts typically offer a range of features and services that are tailored to meet the needs of small and large businesses. These can include:
- Check writing: It allows you to write checks to pay bills, vendors, and other expenses.
- Debit cards: You can use debit cards to make purchases and withdraw cash from ATMs.
- Online banking: You can manage your account online, including monitoring balances, transferring funds, and paying bills.
- Merchant services: A business checking account allows you to accept credit card payments from customers.
- Mobile banking: You can access your checking account on the go using a mobile app
Personal vs. Business Checking Account
At first glance, a personal checking account doesn’t seem different from a business checking account. Both let you make deposits and withdrawals, make purchases, make ACH payments, and write checks. In addition, both provide overdraft protection and are FDIC-insured, meaning your funds are safe.
One of the significant differences between a personal and business checking account is the fees. Most personal checking accounts don’t charge monthly maintenance fees. On the other hand, business checking accounts typically have associated fees.
Although many banks waive such fees when you meet specific requirements, such as maintaining a minimum balance, spending a minimum amount with your debit card each month, or setting a certain number of direct deposits, these fees are often higher than that of personal checking accounts.
Fortunately, there are small business checking accounts with no monthly service fees.
Are There Any Banks Offering Free Business Checking Accounts?
Yes! National banks, local brick-and-mortar banks, and online banks offer free business checking accounts.
Most banks offer two primary types of free business checking accounts:
- Business accounts with no monthly fees
- Business accounts that are free if you meet specific requirements
Online banks typically offer business bank accounts with no monthly maintenance fees. So they’re a good option if you don’t want to worry about maintaining a minimum balance or setting a certain number of direct deposits each month. However, cash deposits cash into an online bank can be challenging.
On the other hand, business bank accounts that are free if you meet specific requirements are often offered by traditional brick-and-mortar banks. In addition, if you can meet such requirements, which vary by bank, you can enjoy other perks that online-only banks do not offer.
Things to Consider When Choosing a Business Checking Account
Business checking accounts are not created the same. To find the right account for your business banking needs, here are some of the important factors to keep in mind:
Opening and Balance Requirements
Just because a checking account is free doesn’t mean you won’t incur anything. Some banks require an opening balance. The amount significantly varies by the financial institution. As such, you need to confirm beforehand.
Other banks require you to maintain a minimum balance requirement to waive fees. Meeting these requirements will help you avoid monthly fees and other additional fees.
Hidden and Incidental Fees
Some banks may charge hidden or incidental fees, such as ATM fees, wire transfer fees, or monthly maintenance fees. Make sure you read the fine print before opening an account.
Speed of Transactions
You’ll want to choose a bank or credit union that offers fast and efficient transaction processing. This is particularly important for businesses that make frequent and time-sensitive payments.
Transaction Limits
With a business checking account, you may need to make frequent withdrawals, deposits, and transfers between accounts. As such, you need to know the maximum transaction limit on these transactions.
For example, a bank may limit the number of checks you can write per month or limit the amount you can transfer in a single transaction. Other banks may also restrict the number of transactions you can post on your account per day.
Find a business checking account that can accommodate your business transaction amount or one that allows unlimited transactions.
Accessibility
Another factor to look at when choosing a business checking account is its location. Do you prefer visiting a local branch for banking services? Do you need access to an extensive ATM network or want to perform all your transactions online?
If you make several deposits and withdrawals and may require a small business loan at some point in your operations, a physical branch will offer the convenience. However, if you want to manage your business finances completely online, online-only banks are a great option. While online banks don’t have physical locations, they typically offer better rates and have low fees.
Integration with Business Tools
If you use accounting software programs like QuickBooks to manage business finances, a bank that lets you integrate business tools into your checking account is vital. When shopping for the best free business checking account, check the bank’s capabilities and whether it syncs with your current accounting software.
The more business tools you can integrate into your checking account, the better. Syncing the right integrations will help streamline your business finances.
Perks and Other Features
Occasionally, banks offer perks such as introductory bonus offers to attract new customers to open an account. For example, you may qualify for a cash bonus if you open a checking account and deposit a certain amount of money or meet a specific spending requirement within three months of account opening.
However, read the fine print to know what you need to qualify. Also, keep in mind that bank account bonuses are taxable, especially if you didn’t spend your own money to earn the bonus.
Consider other account features, such as the availability of a mobile app to make transactions on the go.
Customer Service
Look for a bank or financial institution that offers responsive and helpful customer service. This can include features like 24/7 customer support, easy-to-use online support resources, and knowledgeable customer service representatives.
What Do You Typically Need to Open a Business Checking Account?
The requirements to open a business checking account may vary depending on the bank or financial institution, but typically you’ll need the following items:
- Employer Identification Number (EIN)
- Doing Business As (DBA) certificate
- Business license
- Your Social Security number and photo ID
- Business formation documents
- Ownership agreements
How to Open a Business Checking Account
If you’re ready to open a business checking account and have found a bank, you need to determine whether you can do it online or in person.
Once you know how to open an account, complete the application. This is where you’ll need to provide your personal information and documents, which can vary depending on how your business is structured.
After filling out the application form and providing supporting documents, the next step is to make your initial deposit. The account may have a minimum opening balance.
Once your business checking account is officially open, you can link existing accounts, set up automatic deposits, or schedule bill payments.
