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Before you sign up for a business checking account, it’s important to think carefully about what financial services your business needs. Business checking accounts differ widely, particularly when it comes to transaction limits, fees, interest, and balance requirements.
Many banks place limits on both deposits and withdrawals to your business checking account. For example, you may only be allowed to deposit a certain amount of cash into your account each month for free. If you exceed this cash deposit limit, you could face hefty fees that eat into your business’s revenue.
Just as frequently, banks place limits on the number of transactions your business can make for free. For example, you may only be allowed to make a certain number of check payments, electronic transfers, debit card payments, or cash withdrawals each month. If you exceed that, expect to pay more fees.
Fees are one of the most important things to look at when choosing a business checking account. Banks often advertise business checking accounts as “free,” but in reality the account is only free under certain - often very restrictive - conditions.
To start, check whether a bank will charge a monthly account fee. This is a fee that you’ll pay every month, no matter how often you make transactions from your account. Small monthly fees may be worthwhile if the bank eliminates other fees, but in general it’s a good idea to stick with business checking accounts that come with $0 monthly charges.
You also need to watch out for “maintenance” fees. These are often listed separately from the primary monthly fee, and they can be as high as $50 per month at some banks. If a bank you like offers an account with a maintenance fee, ask them to waive it. If they won’t, you should reconsider whether that business checking account is worth it.
For banks that offer “free” business checking accounts, transaction fees are the most common way to make money off of your business. Typically, business checking accounts come with anywhere between 200 and 500 transactions per month. While that sounds like a lot - and it may be for some businesses - it’s easy to run over that limit towards the end of the month if your business is processing dozens of transactions per day.
Transaction fees are often a flat fee per payment over your limit. So, for example, you might be charged $0.50 for every excess debit card transaction. That’s not much if you’re placing a supply order worth thousands of dollars, but it can be as much as a 25% surcharge if you’re using your business debit card to buy a $2 cup of coffee.
Another important factor that differs between banks is whether they offer interest on cash inside your business checking account. With interest rates low for the foreseeable future, this might not be a huge deal.
Still, if you have a $100,000 balance in your business checking account, earning interest at even a modest 0.1% APY adds up to an extra $100 per year. Although that’s not much, it’s enough to throw a small office party for your employees.
So, be sure to check whether a bank offers interest payments to business account holders and how the interest rates compare to competitors.
Many banks require that you keep a minimum balance inside your business checking account. If you fall below this minimum balance, you could be subject to more fees.
On the other hand, some banks reward you rather than punish you for keeping a higher balance with them. For example, if you have more than a threshold amount of cash in your business checking account, you may qualify for higher transaction limits or higher interest rates.
This reward structure can make some business checking accounts that initially seem too expensive much more appealing.
Another thing to consider when choosing a bank for your business checking account is whether it has a physical footprint or whether it’s an online-only institution. Digital banks can often offer better account terms and higher interest rates since they have less overhead than traditional banks.
On the other hand, if you need access to physical infrastructure like ATMs or want the ability to talk to someone at your bank in person, then a physical bank might be better for your business.
Whichever option you prefer, take a look to see what other services your bank offers. If your business needs a loan down the road, the bank that runs your business checking account is a good place to start. Plus, banks frequently offer better terms to existing customers.
If you choose a small local bank or an online-only checking account, just keep in mind that you might have less financial flexibility in the future.
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BlueVine’s online banking option is a safe and affordable platform for small businesses looking to grow their company, receive low interest funds or simply to have a place to park their revenue. With no fees, thousands of free ATMs and several banking services offered, online banking with BlueVine is both simple and affordable.
Lili Bank is a great option for freelancers who are struggling to manage their taxes and prefer a digital-interfaced bank. With no fees to worry about on the Standard account and no location to tie you down, it makes it easy to travel and work as you please with a great bank beside you every step of the way.
Found allows freelancers and the self-employed to carry out their business banking, keep track of their bookkeeping, and manage their expenses through a single platform. As well as providing you with a Mastercard debit card for business spending, the company offers tax and invoicing tools, such as automatic invoice generation and the ability to pay taxes via the app.
Axos: If you incorporated after June 1, 2020, Axos will add $200 to your new business bank account. Just use promo code NEWBIZ200 on your application. Not a new business? Use promo code NEWAXOSBIZ for a $100 bonus.
Scroll up to compare the top online business checking accounts.