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How to Pick the Best Small Business Bank Account

small business making cash deposit into best small business bank account

One size does not fit all. This is especially true when it comes to finding the best small business bank account for your startup.

With banks, there are big national ones, and there are smaller regional ones. But, because of complicated banking regulations, even the big “national” banks don’t always do business in every state. You might not be able to open an account with them even if you wanted to. And for the regional banks, review blogs like this one might not know about them because we’re not in the same location.

So, how do you pick the best bank for your small business? The answer depends on your business’s unique needs. A wholesale business will take in and pay out money very differently from a retail business. Same with online businesses vs. physical location businesses.

Still, there are some common bank services that should come with all the best small business bank accounts. We go through them below. This way, you can use this article as a checklist when you go look for the best small business bank account for your business.

How Many Bank Accounts Should a Small Business Have?

Every small business should have at least two bank accounts for everyday operations. While you can probably get away with just one account—typically a checking account—having two accounts usually work better for juggling your business operations.

The first type of account you’ll need is a checking account. The second is a savings account.

What You’ll Need in a Small Business Checking Account

You’ll be making all your deposits and withdrawals from your small business checking account. You’ll need to have a debit card for this account. You might need paper checks for this account too, but some businesses might be able to get away with just using debit cards, credit cards, and online money transfers (bill pay, Zelle, ACH).

Pay Attention to the Number and Type of Free Transactions

Every small business checking account will come with a limited number of free transactions. The exact number and type depend on the bank.

Some will have a very low number like 20 transactions, but they’re teller or paper check transactions. The same checking account might give you an unlimited number of free electronic transactions. Other small business checking accounts can give you 250 free transactions, but these include paper and electronic transactions.

You Might Make a Lot Less Transactions Per Month Than You Think

Depending on how you run your business, you might not need to transfer money into or out of your small business checking account as often as you think.

Use a business credit card to make most of your purchases. Then, you’ll only have to pay to the card from your checking account once a month.

If you use PayPal, Venmo, and similar to take payments, the individual payments actually first go into your PayPal, Venmo, etc. account. If you’re a freelancer on Upwork or Fiverr, payments go into your account on the platform first. You can then decide how much and how often you want to transfer money to your checking account.

Once you have a good idea of how often you might move money every month, you can compare your estimated needs to the free transaction limits that come with the small business checking account. Then, it’ll be an easy decision.

What You’ll Need in a Small Business Savings Account

In addition to the checking account, it’s good practice to also open a small business savings account at the same bank. Checking accounts almost never pay interest, but savings accounts do. There’s usually a limit on the number of withdrawals you can make from your savings account. So, be sure to manage your cash flow carefully.

You can stash your profits into your small business savings account, but that’s not why you should open this account. The most important reason to have this account is so you can set aside the money you need to pay in taxes or fees.

Most taxes and fees are due every two weeks, every month, every calendar quarter, or every fiscal year. If you set aside this money in a small business savings account, you won’t accidentally spend them. Then, you’ll always have the money to pay the government.

Make an estimate on how much taxes you have to pay for a specific month, move that money from your savings to your checking, and pay from your checking. This way, you’ll never run into trouble hitting your withdrawal limit for your small business savings account.

The Best Small Business Bank Accounts Should Have a Low Minimum Balance for Waiving Bank Fees

In addition to transaction fees, most banks want to charge you money just for holding your money. This is called a bank fee, and there’s a fee for every type of bank account. Fortunately, most banks also waive this fee if you keep enough money with them.

So, your goal as a small businessperson looking for the best small business bank account is to figure out which bank has the lowest minimum balance requirement for waiving bank fees. The fees typically are only around $10-$20 per month, but you can be nickeled and dimed to death this way.

What you ultimately want to do is to be able to move as much money from your business’s bank accounts to your personal bank accounts. Having a high minimum balance like $5,000 per month to waive pesky bank fees prevents you from doing this. So, lower it as much as you can.

The Bank Should Make Available a No Annual Fee Credit Card and No Fee Bill Pay

These days, payments are typically electronic. As a small business, if you can get a business credit card and have access to online bill pay, you can pay most or even all of your operating expenses this way.

Most bank customers can now sign up for online account access. From your web browser, you can pay various bills online. This service is usually—but not always—free. So, verify you have access to this service before you open your business checking account.

You don’t have to get a business credit card from the same bank you keep your business checking and savings account, but it’s easier if you do. You’ll be able to see your card payments and your account information all in one place. This way, it’s easier to know your business’s cash flow. If you pay off the balance on the credit card when payments are due, then you won’t have to worry about the APR for the cards. And, if the card has no annual fee either, then you’re basically using the service for free.

So, make sure that your bank has a no annual fee business credit card available. You don’t have to apply for it, but you’ll at least have that option.

Your Small Business Bank Account Should Allow Mobile Deposits

Online banking has become pretty standard at every bank. The banks usually also have a mobile app that works with their online banking services. One of the nicer conveniences included in the apps is that they often allow you to deposit a check from your mobile phone.

Even though electronic money transfers dominate banking these days, every once in a while, you’ll probably still need to deposit a paper check. It would save you a lot of time if you can do so through mobile deposit from your phone.

So, be sure to double check that the bank does have an app and does allow mobile deposit into your small business bank account. Don’t forget to double check your transaction limits too. With some banks, a mobile deposit counts towards your monthly free transactions. With other banks, you can have an unlimited number of mobile deposits.

The Best Small Business Bank Accounts Should Come with Free Zelle with Generous Transfer Limits

Zelle is a type of bank-to-bank direct money transfer. The money is transferred right away, so it’s almost like a cash exchange. A Zelle transfer can only be initiated through a browser or from a mobile app.

Your bank will have to be a Zelle member bank to provide the service, but most banks of any size are member banks. Just to be safe, though, double check before you pick your bank.

Depending on your bank, you may have to pay a small fee to transfer money through Zelle. Some banks charge only for sending money. Others charge for receiving as well. Lately, however, most big banks seem to be waiving Zelle charges.

There is typically a daily, weekly, and monthly limit to Zelle transfers. Each bank sets its own limit, so be sure to understand this limit before you integrate Zelle into your business’s payment methods.

Typically, Zelle allows you to send money, receive money, split a payment (e.g., lunch with business associates), and request payments. The precise type of activity allowed is up to the bank. Zelle is also a good way for sole proprietors, partnerships, and LLCs to take out owner’s draws. You can also pay your contractors through Zelle or ask your customers to pay you by placing your Zelle information on an invoice.

With electronic money transfers becoming more and more popular, Zelle is becoming more popular too. So, we believe the best small business bank accounts should come with free Zelle transfers, with limits large enough to fit a business’s needs.

Small Businesses Usually Won’t Need Wire Transfers, but Understand the Fees Anyway

If you need to transfer a large sum of money and transfer it immediately, you’ll have to send the money through wire transfers. We’d be surprised if a bank can’t perform a domestic wire transfer, but smaller banks might not be able to do international wire transfers.

Most small businesses, especially at the startup stage, probably won’t need to wire money. This is why most starter business bank accounts don’t come with a wire transfer fee waiver. However, intermediate business accounts with higher minimum balance requirements sometimes do include free wire transfers.

Some banks charge a wire transfer fee for receiving money, but others do not. Most banks will charge a fee for sending a wire transfer. The fee will differ between domestic and international transfers too. For international transfers, sometimes your money will go through middlemen banks, and these banks will charge a fee as well.

Banks typically charge between $15-$75 per wire transfer. Sometimes, the fee depends on domestic or international and whether online self-initiated or teller initiated. If you expect to have to wire money often, be sure to understand the wire transfer charges before deciding on a bank.

Are the Ancillary Services Offered by Some Banks Important?

Some banks offer services like payroll services, credit card processing services, and bookkeeping services to their small business customers. Almost always, you can get a better deal from companies that focus on one of these services. So, don’t let these services sway you into working with one bank over another.

Pick the Bank Account That Fits Your Business’s Needs Now, and Set Up Other Accounts when Your Business Outgrows the Account

When you’re starting a business, there are a lot of things you have to do. The faster you can do them, the faster you can open your doors and start making money. So, you won’t have the time to research every little detail to make sure you’re getting the best goods or services providers for your business.

This is true for setting up bank accounts. Fortunately, even if you pick a bank or a type of account that turns out to be wrong for your business, it won’t be a fatal mistake. You can always switch the type of account you have, and you don’t have to stay with the same bank forever.

So, use the criteria in this article as your guide. Pick the best small business bank account that fits your business’s needs right now. If you outgrow the accounts, you can always open up more. So, don’t sweat it. Keep moving forward. It’s more important that you move on and do the other things you need to do to finish setting up your business.

Interested in starting and running a small business? Here’s the beginning of our step-by-step guide: What to do right after getting that great business idea.

Questions? Comments?