The financial part of a small business is the heartbeat of a company. Figuring out what bank account works best for the needs of a small organization takes a little research and some self-reflection. The minute a small business opens its doors and makes a sale, how to process the payment and where to keep funds becomes paramount to continuing success.
According to the United States Small Business Administration, approximately 33.2 million small businesses exist and make up around 99.9% of all companies in the country. Banks have created many options for business owners to cater to a wide range of needs.
How can a company choose the correct bank account to match where they are in its current growth? Here are some things to consider when selecting a bank and a specific account.
The first thing to consider when choosing a small business bank account is whether branches are located near the company. Although much banking is possible online today, there are occasions when it’s crucial to speak to a banker in person.
Consider whether a branch is close enough to run to on a lunch break. How big is the location? Can the company withdraw its savings when necessary?
Make sure any bank account is with a secure financial institution. In addition to being FDIC backed, consider how choosy the bank is about the way they issue loans. Are transactions secured or unsecured? The cash collateral on accounts can impact ratings, especially when faced with a crisis or emergency.
While most businesses would receive all their money eventually, any issues could delay access to funds. For companies with cash flow issues, such delays could cause serious harm or even lead to closing their doors permanently.
3. Minimum Deposits
Consider how much must stay in an account to keep service fees at bay or tap into interest earnings. Small businesses might not have a lot of extra cash to keep in a bank account, so flexibility in this area is helpful.
4. Customer Service
How easy is it to reach a customer service representative when necessary? Look for a bank offering accounts with access in a variety of ways. For example, many companies now tap into the power of artificial intelligence (AI). Bank of America utilizes an AI-powered chatbot, with around seven million customers using it each month.
5. Service Fees
Pay attention to service fees and extras. If the account falls below the minimum threshold, how much might those charges cost? Those on a shoestring budget understand every little fee can eat into profits and mean the difference between scaling up quickly and missing out on opportunities. Business owners might find one type of account has zero fees while another charges a monthly amount to keep the profile open.
Does the bank account offer the ability to integrate easily with the company’s bookkeeping software? Look for ways to integrate with software already on board to make the entire process more intuitive.
7. New Account Bonuses
Keep an eye out for an account that offers new account bonuses. If the brand deposits a certain amount in the first month, does the bank offer some free money? A few hundred dollars bonus can make a huge difference when every penny counts.
When Should You Open a New Business Bank Account?
While conducting business via a personal checking account might be tempting, it’s best to separate funds from day one. As the business grows, a separate account becomes a necessity. Be prepared by knowing what local banks offer and what type of account works best for the company.
Devin Partida writes about investor technologies, big data and apps. She is also the Editor-in-Chief of ReHack.com.