As a small business owner, you're surely aware of the importance banking plays in day-to-day operations. Most businesses rely on banks to receive payments, pay their bills, and remit salaries, among many other core tasks and services. As a result, choosing the right bank is essential to ensuring your business needs are met.
This article will discuss the options small business owners should consider when choosing a bank and outline the main features that the best banks for small businesses should have.
The Benefits of Opening a Business Bank Account
Before delving into what you should look for when exploring your business banking options, we must first reiterate the benefits of opening a business bank account.
Opening a separate account for your business creates a necessary separation between your personal and business finances. From a personal finance perspective, keeping the two separate will help you protect your personal assets in the case of business liability and prevent credit score damage if your business credit falls.
Separating the two will also help you run your business more efficiently. Having a business account makes it easier to track expenses, calculate net income, and generate financial statements.
Taxes are another reason why creating a business account is necessary. Besides ensuring accurate tax filings and Internal Revenue Service compliance, setting up a separate account for your business allows you to deduct business expenses from your tax return. This can significantly reduce your yearly tax bill, and leave you with extra money to invest in other areas of your business.
What to Look for When Choosing a Small Business Bank
As is the case with every aspect of your business, your banking needs will vary depending on the particularities of your business and the specific nature of the sector you operate in. There are essential features that characterize the best small business banking solutions. In the sections below, we will go over what you should look for when choosing a bank for your small business.
Online/In-Person Banking Options
The ideal bank for your small business should provide you with both in-person and online banking solutions. Regardless of whether you are running an online business, or a brick and mortar one, having access to online and mobile banking through a mobile app offers you the convenience of managing your finances and monitoring your monthly transactions whenever the need arises.
But as important as an online bank option is, you still need access to comprehensive in-person banking services at multiple branch locations. This is especially the case when operating a cash business since cash deposits will have to be made regularly. Moreover, in-person banking comes with more customer support options.
Small Business Loan Offers
The bank you choose for your small business should provide you with a wide range of loan offers as well as lines of credit. Depending on your sector of activity and overall strategy, you might need access to extra funds to meet financial obligations or finance business expenditures.
The right bank should accommodate these needs by facilitating the process of obtaining business loans, extending lines of credit, and removing overdraft limits on business checking accounts. The bank should also have accommodating repayment terms that enable businesses to operate more flexibly.
Fees for Business Bank Accounts
While individual banking fees might seem minute, they add up quickly. Naturally, you should opt for a bank that charges low fees for business accounts and offers as many fee-free services and free transactions as possible.
Some of the fees that you should keep an eye on when comparing different banks include standard transaction fees, ATM fees, monthly service fees, and monthly maintenance fees.
Perks and Incentives
Many banks and credit unions offer perks and incentives to business account holders. For instance, a startup may qualify for a bonus when opening a small business checking account. Additionally, minimum opening deposit requirements may be waived when setting up a business savings account
Here are some other incentives you should look out for:
- High APY on savings and money market accounts
- Free unlimited transactions
- Free online bill pay services
- Free business checking
- No annual fees for Visa business debit cards
- Low interest rates for business credit cards
- Unlimited free check deposits
- Free cash deposits
- No minimum balance requirements
- Free ATM services
- Fee reimbursement when using other lenders' ATMs
Does the Bank Have Experience in Your Industry
A major factor you should take into consideration when exploring your banking options is the institution's experience in your industry. Whether you work in real estate, e-commerce, or tech, it is essential to work with a bank that can offer your new business the necessary guidance through the host of industry-specific challenges that you will invariably face.
Banks that have extensive experience working with clients in your industry will understand your business interests better and know what products and merchant services to offer when tailoring an account to your needs. Before making a decision on which bank to choose, make sure to inquire about each institution's experience in your industry and whether their client portfolio includes businesses like yours.
Payroll Integration
Generous perks, low daily balance requirements, and free checking accounts are not the only things you should focus on when choosing a bank for your business. Essential operational services such as payroll management are just as important. Despite being a relatively simple business task, managing payroll can become difficult once your business starts growing.
The bank you pick should offer streamlined payroll services that include sending payments to employees' bank accounts, filing payroll taxes, and managing HR tasks. Payroll services are offered by most major banks, namely U.S. Bank, Wells Fargo, Chase Bank, Capital One, and Bank of America.
Customer Support Services
The importance of excellent customer support service cannot be overstated when it comes to business banking. Unlike personal finance management, a business involves various moving parts and challenges that must be addressed with urgency.
As a business owner, you are faced with a wide range of responsibilities that include cash management and cash flow forecasting, implementing an operating budget, estimating fixed and variable expenses, managing payroll, and calculating your income. Your bank should help you tackle these tasks by providing you with easy access to in-person and online customer service, as well as offering continuous support through email, and phone.
Keep Track of Your Small Business Finances Quickly and Easily With Skynova
Choosing the right bank can go a long way towards helping you stay on top of your business finances. However, it is important to keep in mind that the responsibility of managing all financial aspects of your business still falls on you. This is why it's crucial to have a system in place that helps streamline your financial management tasks.
Skynova offers a comprehensive solution that is tailored to the unique needs of small business owners. Skynova's Accounting Software allows you to track your expenses, income, and taxes in a single, easy-to-use platform and helps you make more informed decisions by providing you with detailed financial reports whenever you need them.
Notice to the Reader
The content within this article is meant to be used as general guidelines and may not apply to your specific situation. Make sure to check out multiple banks and credit unions to ensure your small business is getting favorable rates, low minimum account balance requirements, and good customer support service.