Best Banking Options for Your Small Business

Dedicated bank accounts are an essential tool for tracking business expenses and gaining access to financial assistance features. Each banking institution has its own features and costs associated with their business accounts, which you can learn more about before choosing a bank account for your company.

 

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What is a business bank account?

A business bank account is a checking or savings account that business owners use to keep business expenses separate from their personal finances. They can include standard services like debit cards, credit cards, overdraft protection and check and cash handling. Some business bank accounts allow business owners to issue company debit or credit cards to employees.

 

Business bank accounts vs. personal bank accounts

Personal checking accounts are usually free or have a low fee that the bank waives if the account meets certain conditions, while business checking accounts may have transaction fees or monthly maintenance fees. Business checking accounts usually have lower interest rates, and credit cards associated with business accounts tend to have higher credit limits than personal accounts.

 

Some banks allow sole proprietors to use their personal checking accounts as a business account, but others have limitations. If you run your business as a separate legal entity like a corporation or LLC, you’re usually legally required to keep your company’s finances separate from your personal spending.

Related: Budget Management: Three Skills Essential for New Manager

 

Why small businesses should have a business bank account

A business bank account can help small businesses organize finances and simplify recordkeeping. Having a business account can also make it easier to file taxes for your small business because all of your relevant transactions are in one place. Many banks offer business accounts an itemized spending report each year, giving you in-depth detail that you typically wouldn’t get with a personal bank account. Business bank accounts are also essential for applying for a loan to grow your company.

 

Even if you’re the sole proprietor of your business and aren’t required to have a business bank account, it can help limit your liability for business expenses, legitimize your business to the IRS and show customers and clients that they’re working with an established business.

Related: 10 Steps to Starting a Business

 

Best banks for small businesses

Here are three of the top banks for small businesses where you can manage your business expenses and access other financial benefits:

 

Chase

Chase offers free business checking for accounts that can maintain a minimum balance of $1,500. Even if you go below this balance, the standard monthly maintenance fee is only $15 per month or $12 per month if you choose paperless statements.

 

Wells Fargo

Wells Fargo has an extensive banking system and 24/7 customer service. Their Simple Business Checking Account costs $25 to open, and they waive the $10 monthly service fee if you can keep a minimum balance of $500. Wells Fargo business credit cards also offer 1.5% cashback on any purchase.

 

Axos Bank

Axos Bank doesn’t offer credit cards, but they’re a good choice for people who want to earn a high annual percentage yield (APY) on the money in their business account. With the Axos Bank Business Interest Checking Account, you can earn 0.8% APY. The account is free if your average balance stays above $5,000.

 

Frequently asked questions about small business banking

 Here are a few frequently asked questions about banking for small businesses:

 

What is the best way to choose a business bank account?

When deciding which business bank account is right for you, consider your financial goals. Compare business loan terms and look for a bank with a low minimal balance requirement if you want to avoid monthly maintenance fees.

 

What is the best bank for a startup business?

Startup companies can benefit from banking with a large national brand where they have access to business loans. Chase may be a good bank for small businesses in their beginning stages because they offer financing for up to $350,000 in startup costs.

 

Which bank is best for a business loan?

While you should consider the benefits of each bank, Wells Fargo has a simple process for applying for loans between $10,000 and $100,000, with interest rates starting at 6.75% depending on the type of loan.

 

How much can I borrow for a small business loan?

The amount you can borrow for a small business loan depends on many factors. Banks offer different amounts based on your personal credit history and what you need to finance.

 

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