Choosing a Checking
Account for Your Business
Just like choosing
a personal checking account, you should select a business checking account,
or a series of accounts, that match your needs. Start by considering how
you use your business checking account:
- How many checks
do you write each month?
- How many and what
types of deposits do you typically make?
- How large of an
average balance do you maintain?
- Is there a convenient
branch or ATM close by, especially if you make daily deposits?
offer a basic business checking account with very low or no fees. Most
institutions will restrict the number of checks that can be written on
a low or no fee account to prevent a business from having an account with
very low balances and writing a large number of checks. For instance,
most institutions would not allow an account with a very low balance to
be used to process payroll checks for a business with hundreds of employees.
A few years ago with
the enactment of the Dodd-Frank Act, institutions were allowed to start
paying interest on corporate checking accounts for the first time since
1933. Some institutions have taken advantage of this change and now have
business checking accounts that pay interest depending on the level of
balances and activity.
For businesses with
larger cash balances, the good news is that most institutions have programs
that combine a business checking account with some type of interest bearing
savings account. They may even have an automatic sweep provision that
moves balances in excess of a predetermined level out of a non-interest
bearing checking account into an account where interest is earned. There
may be a limit on the number of monthly transfers back into the checking
account, but that works fine. All you do is periodically (perhaps once
or twice a month) move the funds you will need back into the checking
account. If you can do this online, so much the better.
If you are looking
for an account where you will write a large number of checks or a payroll
account for a large number of employees, be sure to discuss your needs
with the institution, and they will probably have an arrangement with
fees and balance minimums that will work for your business.
Depending on your
needs, ATM access to the account and online capabilities may be a must.