How to Choose a Small Business Checking Account


A small business checking account should make your life easier, not create headaches with hidden fees and restrictions. There are thousands of banks in the United States, so you shouldn’t settle on just any account. As you research how to choose a bank for your small business, here are four features to keep in mind.

1. High Transaction Limits

Depending on the small business checking account, there may be restrictions on how often money can go in and out. The bank could set maximum limits on how much cash your business can deposit per month and on the number of total transactions, including withdrawals, checks, debit card purchases, and electronic money transfers.

If you go over the limit, the bank will charge a fee. For example, you might get 200 free transactions per month and owe 50 cents for each one over the limit. Consider how you plan to use your bank account and look for one that gives you enough of a buffer so you avoid these transaction fees.

2. A Reasonable Balance Requirement

Many small business checking accounts have a minimum balance requirement. For example, your bank may require that you have at least $5,000 in your account throughout the entire month or else you’ll owe a fee.

A bank could offer multiple tiers of accounts based on how much money you deposit. Premium checking accounts will have the highest balance requirement but will come with other benefits like higher transaction limits and free checks. But if your business ever falls below the balance requirement, you could face a steep fee or have your account downgraded to a basic version.

If an unexpected setback pushes you below your bank’s minimum balance requirement, you could take out a cash flow loan. These loans typically have a quick approval process, so you can call on one before the bank penalty kicks in. Then you can pay back the loan when your cash flow balances out.

3. Integration With Payroll and Accounting Software

If you’re using software to manage payroll and taxes, find a business checking account that can integrate with this technology. That way, financial transactions will automatically update across all of your records, rather than you updating them manually. For example, if you make a business purchase through your new bank account, it’s then listed as a possible deduction in your tax software.

The payroll and accounting software should feature a list of approved banks so you can figure out which account would be compatible.

A contractor reseraches how to choose a bank for a small business.

4. Pays Interest or a Sign-Up Bonus

The purpose of a checking account is to manage your daily transactions, but you may be able to earn some free money while you’re at it. See whether a bank pays interest on its business accounts. Other banks may offer a cash bonus for new small business customers. If it’s a close decision between a few options, this extra benefit could be the tiebreaker.

Branch Locations: Physical or Digital-Only?

One last decision is figuring out whether you’d like a bank with physical branches. That way, you can visit in person for help with your account and use the bank’s ATMs. This is particularly important if your customers pay with cash as you need a convenient place to make deposits.

Digital banks do not have branches or their own ATMs. You can deposit checks by mail or mobile app and make withdrawals from other ATMs; the digital bank should reimburse the fees. Since digital banks have fewer expenses, they usually charge lower fees on their checking accounts, have smaller balance requirements and offer higher interest rates. However, they typically do not accept cash deposits — important to note if that’s how your customers pay.

If you want the best of both worlds, you could open one account at a bank with physical branches to deposit cash and then transfer the funds to a digital bank to handle most of your small business finances.

You depend on your checking account every week so it pays to spend time considering how to choose a bank for your small business. By looking for these features, you’ll make sure your account is up to the job.

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