A checking account is an essential banking product because it allows you to move money around quickly and easily. Banks offer checking accounts specifically for businesses – learn how to find the best fit for yours.
When you start a small business, or if your existing business is starting to take off, it makes sense to open a business checking account. With this kind of account, a business can make purchases, pay bills, write checks, make deposits and withdrawals, and use a debit card for transactions.
One of the key benefits of a business checking account is that it builds a financial wall between your business funds and your personal funds, making it easier to keep records for tax purposes. Furthermore, a business checking account can shield your personal assets if your business is sued or the IRS comes after you for unpaid taxes. Some business checking accounts even let you earn interest on your money.
A business checking account can also:
- Help you track the financial performance of your business.
- Lend credibility to your business.
- Provide access to bank services that are only available to businesses, not individuals.
There's a lot that goes into comparing business checking accounts and choosing the one that best suits your needs. Here are 14 questions to ask when shopping for a business checking account:
- Do you want to open an account with a financial institution that operates physical branches, or are you OK with an online-only bank?
- Do you want to do business with a national bank, midsize regional bank, small community bank, online bank or credit union?
- How stable is the financial institution, and how long has it been in business?
- What are the requirements for the account's opening deposit and minimum balance?
- Are there any introductory offers, such as a cash bonus when you open an account?
- Does the account charge any fees, such as monthly maintenance fees?
- Can you earn interest on money in the account?
- Will you be able to get a debit card?
- Will you have access to financial products such as credit cards, lines of credit and Small Business Administration loans?
- Does the account limit the number of transactions per month?
- How is the financial institution's customer service?
- How robust is the financial institution's ATM network?
- Does the financial institution offer features like online or mobile banking?
- Will you be able to integrate your account with your business software?
"Look for business bank accounts that offer no account minimums or fees, digital and mobile-optimized features, and opportunities to earn on savings such as a competitive (rate) on account balances," says Rob Daniel, director of product management at Intuit QuickBooks. "And selecting a business bank account that's integrated with other financial tools, such as accounting or payment solutions, can be incredibly beneficial for delivering a truly holistic view of a business's financial health."
Among the things you typically need to open a business checking account are:
- Employer identification number, or Social Security number if you're a sole proprietor.
- Documents that show your business was formed legally, such as articles of organization for a limited liability company.
- Proof of "doing business as" name, also known as trade name, fictitious name or assumed name, if your business operates under a different name.
- Business license.
- Photo ID, such as a driver's license.
- Name, address and phone number of your business.
- Names of people to be listed as account holders.
- Initial deposit (if it's required).
You typically can open a business checking account at a branch, over the phone, online or on a mobile device. Not all financial institutions offer every one of these options, though.
In addition to a checking account, you might be able to set up a business savings account, business credit card account or merchant services account. A merchant services account lets you process credit and debit card transactions from customers.
Once you've decided where you'll open your account, you'll need to gather all of the required information and give it to a bank employee or input the information online. Keep in mind that a financial institution might check your credit when you apply for a business checking account.
"A good business bank account is not 'a one size fits all' kind of choice, as it depends on the type of business," says Kunal Sawhney, CEO of Kalkine Group, a global equity research firm that tracks banking and other industries. "However, every business bank account must fulfill the core requirements of any business. It will receive payments from customers, pay out salaries to employees, and make payments to different vendors and parties associated with the business."
To help narrow your options, these business checking accounts should appeal to a wide variety of businesses.
Axos Bank Basic Business Checking
- Monthly fee: $0.
- Minimum opening deposit: $0.
- Minimum balance required: $0.
- Best for: Small businesses looking for banking perks.
The Basic Business Checking account from online-only Axos Bank serves up a menu of features including a $200 welcome bonus for new business owners, the first 50 checks at no cost, unlimited domestic ATM fee reimbursements, up to 60 remote deposit items per month, two reimbursed domestic wire transfer fees per month, cash deposits via the MoneyPass and Allpoint ATM networks, and weekday phone access to relationship managers.
Bluevine Business Checking
- Monthly fee: $0.
- Minimum opening deposit: $0.
- Minimum balance required: $0.
- Best for: Small businesses with a high volume of transactions.
Digital-only Bluevine permits an unlimited number of transactions. However, all accounts must adhere to limits on monthly deposits and withdrawals. In addition, Bluevine charges no ACH fee, overdraft fee, incoming wire transfer fee or in-network ATM fee. It also delivers a 1.5% annual percentage yield on balances up to $100,000 if you meet certain conditions. You'll get two free checkbooks per year and can also keep your company's finances organized with up to five subaccounts.
Chase Business Complete Checking
- Monthly fee: $0 for accounts that meet certain conditions; otherwise, monthly fee is $15.
- Minimum opening deposit: $0.
- Minimum balance required: $2,000 to avoid monthly fee.
- Best for: Small businesses seeking the security of an established national bank.
JPMorgan Chase is not a new kid on the banking block. It can trace its origins back to 1799, and today it operates more than 4,700 branches and about 16,000 ATMs. This can give peace of mind to a small business wanting easy access to in-person service. Or you can opt for over-the-phone, online or mobile banking.
Although the bank's fee structure isn't as attractive as some of its competitors, a new customer can receive a $300 bonus for opening a Chase Business Complete Checking account. Furthermore, the account enables your business to accept credit card payments anywhere in the U.S.
LendingClub Tailored Checking
- Monthly fee: $0 for accounts with balances over $500; otherwise, monthly fee is $10.
- Minimum opening deposit: $100.
- Minimum balance required: $0.
- Best for: Small businesses wanting to earn cash back.
Among the best features of the LendingClub Tailored Checking account is the ability to earn unlimited 1% cash back on qualified purchases with your debit card. In order to obtain cash back, your account must be open at least 30 days and the average balance must be at least $500. You also can earn 1% APY on balances up to $100,000. All ATM fees are reimbursed.
nbkc bank Business Checking Account
- Monthly fee: $0.
- Minimum opening deposit: $0.
- Minimum balance required: $0.
- Best for: Budget-minded small businesses.
The nbkc bank Business Checking Account stands out due to its lack of fees: no monthly service fee, minimum balance fee, overdraft fee, inactivity fee, stop payment fee, returned item fee, insufficient funds fee, dormant account fee, incoming domestic wire transfer fee or in-network ATM fee.
The bank is primarily an online bank, and it is part of the MoneyPass ATM network, with 37,000 ATMs. It does operate branches in the Kansas City, Missouri, area and has relationships with affiliate banks throughout the U.S.
A few alternatives to business checking are available. They include:
- Business savings account. A savings account could be a viable alternative to a business checking account. For instance, you might earn interest on money in a business savings account but not a business checking account. However, you might not enjoy as many features with the savings option as you would with the checking option. Plus, you won't be able to make payments or write checks.
- Personal account. You could funnel money from your business through your personal account. However, that can cause confusion about which deposits, purchases and other transactions should be attributed to your business and which ones should be attributed to you.
- Cash management account. A cash management account isn't a traditional checking or savings account. Rather, it combines elements of both. You might be able to write checks or use a debit card with a cash management account. Also, money in one of these accounts typically earns interest, and the account normally doesn't charge fees. But in some cases, you might not have access to bank branches or features like online bill paying.