As a small business owner who runs an online and offline business, and both being separate from one another, one of the first steps I took was to obtain corporate banking services . The reason being is that the customers can pay in my company name instead of my personal name. As well, it helps during tax season when business income/expenses are separated from personal income/expenses. Neither of my businesses are incorporated yet, but trust me, it’s much easier come tax time.
The small business accounts offered by various financial institutions really vary in terms of cost and features. I mainly focused on cost, as I despise account fees, and more importantly my businesses are small and certainly not at any point that they can afford to throw away money. Generally speaking, all the banks offered both a set monthly fee plan where you get so many transactions per month in addition to offering “pay as you go” plans.
So, I wanted to share with you a few points on what to look for when in search of a business account for your small business.
1. Think for the Future
Most large banks offer added benefits such as online services that help save time and money on tax and accounting assistance. These may include sending invoices, collecting payments, payroll and loan applications. But keep in mind that banking is a competitive business, and it rarely takes more than a year for a new product or service to be copied by banks across the country. So look towards the future and find a bank that will offer you the tools as your business grows. Even though you’re relatively a small business when starting out, you’ll grow through time, and your banking needs will expand as well. Here’s what to look for in a bank, and services that you may need through time:
- Checking account
- Business savings account
- Payroll services
- Credit card
- Deposit-only card
- Online banking
- Foreign business bank accounts
- Lines of credit
- Commercial real estate
- Equipment leasing
- Wire transfers
- Lock box
- Merchant services
2. Location and Hours
Hours – This one was an important thing for me, especially since my business is a part-time thing and I work mostly evenings and weekends. I wante the flexibility to be able to deposit money late in the evening and weekends.
Branch Locations – This is another really important aspect for me. I want someplace that has a good number of branches near me, plus the convenience of a branch close to my house and my “day job” office. I’m gonna be driving enough as it is, I don’t need to waste more gas depositing my earnings.
3. Fund Availability
Nobody likes having their cash held hostage until the check clears. Some financial institutions hold funds up to 5 business days in order to verify that the check is legit and that the other bank has the funds to cover the check. So, how long does it take to post to your account and become available is a question to ask. Keep in mind that this can be negotiated as well, after all it’s your money, and liability can be split 50/50. For example, you can negotiate with the potential bank to automatically release up to a certain amount upon deposit.
4. Monthly Transaction Limit
Pay attention to the monthly transaction limit. By signing up for a free business checking account, they will put a cap on the amount of transactions you’re allowed to make in a month. Sometimes it’s worth paying a very basic minimum monthly fee, and get a transaction limit that will work for you and your business.
Don’t be afraid to negotiate. Just as you know you are likely to offer a deal to that customer you really want to keep, so will your suppliers. Financial institution always leave room for those willing to negotiate, so don’t be intimidated. In order to earn your business, most will match the competition’s offer, and all you have to do is ask.
Finally, don’t be afraid to walk away, and find someone who will suit your needs. I went through four or five banks that I researched, negotiated, and asked, before I finally settled with the current financial institution that I’m with.
Readers, do you have a small business account? What made you choose your current financial institution? Did you negotiate anything?
Cheers, and thanks for reading!