Checking Account For Your Small Business
A business checking account can make it much easier to see where a business is spending money and reaping the most profit. Many business owners decide to open a checking account for the business to also keep the financial aspects of the business separate from their personal lives. Here are some essential factors to consider when opening a checking account for your small business.
Free Checking or Fee Checking
One of the most important questions you should ask before signing on the dotted line for a checking account is if the business checking account is free. Many banks boast that the account is free, but indicate in the small print that a minimum daily balance must be met to avoid the monthly maintenance fee. These monthly maintenance fees can range from $10 to $25 or more. Therefore, this is an important detail to pay attention to when finding the right bank. You may also want to consider the number of ATMs available and transaction limits on the account.
FDIC Insured or Not
Another vital detail when selecting a checking account for your business is if the bank is Federal Deposit Insurance Corporation, or FDIC, insured or not. FDIC ensures that if the bank burns down, closes its doors or experiences a loss that your money is still back by this insurance company and will not be lost. An important factor to keep it mind is that credit unions are not FDIC insured. However, theses financial institutions do have an alternative insurance called the National Credit Union Share Insurance Fund, or NCUSIF.
Overdraft Protection Offered
It is very realistic to consider that you may make mistakes in the bookkeeping of your business checking account. However, these mistakes should not cost you an arm and a leg. Therefore, it is important to consider a business checking account that offers overdraft protection. Overdraft protection will kick in and cover checks or payments should you not have enough money in your checking account. This can help the business avoid embarrassing bounced checks. Be sure to pay attention to fees assessed when overdraft is activated. Many banks charge $29 or more per occurrence for this service.
Bank Growth with Business Growth
Projecting growth within your business is important and knowing that the bank you are using is able to handle that growth is even more important. Therefore, it is vital that the bank that you use for your business checking also offers other services that the business may need later such as payroll, small business loans and investment options for the business and employees. These are all important services that your business may need someday. So, make sure you establish a relationship with a bank that can grow with you in the process.
Opening a checking account for your business is one of the first steps you can take to making your business more legitimate to customers and the IRS. It helps during tax time, when making yearly projections to have finances separated, and when tracking spending over time. In addition, opening a business checking account can begin to establish a vital relationship with a financial institution that can help your business grow even more.