How to Choose a Business Checking Account: 9 Factors to Consider

Why should you open a business checking account?

Before we begin, it’s important to understand the role that checking accounts play in managing your business’s finances.

Partnering with a bank to set up checking and savings accounts can provide a variety of benefits to help grow your business:

• Accept credit card payments—Setting up a checking account and linking it to a merchant services provider will allow you to start accepting credit card and online transactions for your business.
• Simplify your taxes—For simplicity’s sake, it’s wise to have separate accounts for all your legal entities to ensure reporting on your business’s earnings is as easy as possible come tax season.
• Automate bookkeeping—Many bookkeeping solutions will integrate with your business’s accounts to automate various financial and administrative tasks, helping you manage bills, prepare a budget, send out invoices and make payroll without investing time and resources into manually preparing each element.
• Gain stronger personal liability protections—Business owners should never commingle their personal finances with their businesses, as doing so could put them at risk of litigation should problems arise down the line. Always ensure strong financial separations between all business and personal accounts.
• Establish business credit—Banks will perform due diligence when issuing credit to a business, meaning you’ll need both a bank account to receive the funds and the financial structures for effectively receiving and efficiently using those funds.
• Gain access to business-only services—Most banks will offer special services and perks to businesses that open accounts with them. As a result, opening a business checking account can provide you with a host of additional resources you can use to help your business thrive and grow.

9 factors to look for when choosing a business checking account

While most business checking accounts offer similar services at a surface level, there are a multitude of differences between the various offerings that can make or break their effectiveness for your particular organization.

While all checking accounts are designed to be everyday transactional accounts, the small differences between the banks themselves (as well as the terms and fees related to the account) are the real differentiators.

Below, we’ll outline nine differentiators you should look for when making your decision about your next business checking account.

However, note that the most effective way to determine if an offering is right for you is to speak with a business banker to understand the intersection between the bank’s services and your business’s unique needs and challenges.

1. Account benefits and features for streamlining your finances

The first and often most important factor to consider is whether or not the bank offering the business checking account has the benefits and features you need to manage your finances effectively.

After all, a checking account that’s difficult to use is of no use to anyone.

To start, think of your different uses for a checking account, such as sending or receiving funds electronically, paying your employees and accessing and using the funds via a debit card.

Then, make sure the features and benefits of your potential account options all intersect with your list of checking must-haves.

For example, if you intend to receive credit card payments, you may want to partner with a bank that offers merchant services and payment processing solutions. You may even save money by taking advantage of bundled services.

If you want a more integrated financial partner, look for banks with integrated solutions for other business areas, such as cash management services or tax management solutions.

2. Low or minimal account and service fees

Just like personal checking accounts, business checking accounts can come with various related fees that can significantly cut into your funds if you’re not careful.

In general, look for accounts that have low or easily avoidable fees across several different areas:

• No minimum balance requirements or monthly maintenance fees (or options that make it easy to avoid these fees depending on your business’s size).
• Free access to ATMs and ATM networks to avoid withdrawal fees.
• Overdraft grace zones and advanced protections for reducing the impact an overdraft might have on your finances.
• High limits for how much money you can deposit per month before you are charged a fee.
• A significant number of transactions on the checking account (usually between 50 and 500, depending on the account type) with no fees.

For this, you should always have an accurate picture of how you plan to use the money in your account before you decide on a particular business checking option.

For example, if you make frequent cash deposits of $10,000 or more per month, you may have to choose an account that caters to these more frequent transactions.

3. Brick-and-mortar locations in your local area

Being able to walk into a physical bank and discuss your business’s needs with a banker is invaluable.

At face value, online banking options will generally have lower fees or other minor financial incentives for choosing their services.

However, when it comes to business accounts and transactions, brick-and-mortar locations are generally advantageous because of the low risk that these extraneous fees will be triggered.

Remember, unlike choosing a savings account or CD, where you can shop around for the highest return rate, choosing a checking account is more about finding the right financial partner to help you effectively manage your business’s finances.

Having in-person access to a financial expert, or a team of experts, with knowledge about business banking and operations can provide an invaluable resource for ensuring all your business’s financial needs are met in a way that prioritizes customer service and your business’s place in the local community.

4. Options for earning interest on your accounts

Many businesses choose to keep their liquid funds in business savings accounts or business money market accounts.

Business owners who want to centralize their accounts under a single roof will want to review any savings options available at their bank to make sure the rates on these different options are competitive in the broader market.

Because of this, you should always review the full breadth of your bank’s business checking and savings options to ensure they offer all the different accounts you need to effectively manage and grow your organization’s money.

5. Introductory offers for opening a new account

Most banks will run introductory offers that provide different benefits or cash rewards for opening new checking or savings accounts.

While the presence of an introductory offer won’t likely be the sole reason you choose a particular bank, they are still a great way to capitalize on your new relationship and start off on the right foot.

6. Presence of a mobile app or online portal

The days of walking to the bank with a bag full of cash under your arm are long-since past (for most businesses at least).

In today’s digital-first world, businesses are increasingly turning to mobile and online solutions for their different banking needs. Also consider if you want to access both your consumer and business accounts when you use mobile and online banking services.

The presence of a mobile app, for example, can give you access to a variety of tools for quickly gaining access to the information you need to manage your business:

• Access to instant balance solutions with quick overviews of your available funds without even signing in to the app.
• Alerts and messages to help you keep on top of your account activity and any potential fraud.
• Quick and easy fund transfers between your bank accounts, other financial institutions and solutions for both quick payments and mobile deposits to help keep your business more agile in its ability to handle transactions.

Similarly, the presence of an online portal can help you keep an eye on your money, allowing you to work seamlessly from anywhere and empowering you to fulfill self-service tasks such as ordering checks or managing funds without having to be physically present in a local branch.

7. Easy access to financing through business loans, credit cards or lines of credit

Much like reviewing the different savings options available at your bank, it’s also wise to review their options for financing and credit to determine whether any of the lending options are the right fit for your business.

From business credit cards to small business loans and lines of credit, businesses rely on various financing options to gain access to the funds they need to grow more quickly.

By opening a business checking account, you are also starting a new partnership with your bank that may open up to favorable terms or interest rates on loans and other forms of business financing.

8. Protection and insurance on all checking and savings options

You should always work with a reputable bank that insures deposits such as checking and savings accounts through the Federal Deposit Insurance Corporation (FDIC).

The FDIC is an independent agency of the United States government that protects bank depositors against the loss of their insured deposits in the event of a bank failure, up to a limit of $250,000 per depositor, per FDIC-insured bank, per ownership category.

For example, if you have a balance of $300,000 in a single checking account at a single bank, the FDIC will guarantee the recovery of at least $250,000 of these funds, while also taking ownership of the failed bank and attempting to recover as much value as possible through the sale of assets and other financial strategies.

When it comes to your business’s finances, it’s critical for you to ensure your funds are stored in an FDIC-insured checking or savings account to hedge your finances against a potential bank collapse.

9. Easy integration with other key technologies in your business

It’s important that your banking solution integrates with any services your business uses to manage its operations and finances.

While some banks will offer integrated packages for various functions such as payroll or benefits management, there are usually a few third-party services that you’ll rely on to gain access to advanced features and functionality critical to your business.

For example, you should always work with your bookkeeper to ensure their accounting and bookkeeping software can reliably integrate with your business’s bank accounts to ensure their accuracy.

Similarly, you’ll want to ensure any invoicing software or other financial tools you use at your business integrate seamlessly to avoid having to manually transfer data between your various programs.

Stop by a local branch to learn more about the business banking solution that’s right for you

Finding the business checking account that’s right for you is an essential first step in driving strong profitability and ensuring the long-term financial health of your business.

Opening a checking account gives you access to a variety of features and benefits that can help manage your business’s finances, from the ability to accept credit card payments through related merchant services to automated solutions for bookkeeping and tax reporting.

To learn more about the numerous ways that partnering with a local bank for your checking and savings needs can help your small business, please reach out to us at your local Associated Bank branch to speak with an experienced business banker.

We’d be happy to discuss the pros and cons of each of our different business checking options, and the different scenarios where each solution could match your business’s unique financial needs and challenges.