If you run any type of business, it’s advisable to get a dedicated bank account for it. It makes it easier to accept payments from customers and track your finances accurately. This article will explain what a business account is and the tips for choosing a good one.
What Is A Business Bank Account?
It is a separate account created for your company. You use it only for company-related transactions and nothing else. It works just like personal accounts with the same features, such as deposits, withdrawals, instant transfers, etc.
Why Are Corporate Bank Accounts Necessary?
- It is legally required if you run a limited liability company. In this case, it ensures you keep personal and company finances separate and retain your limited liability protection in case of bankruptcy.
- It allows you to accept online payments from credit and debit cards. You can not do this with personal accounts.
- It makes your company look more professional to vendors and customers. Transacting with personal accounts can make people think your business is just a short-term hobby.
- It makes it easier to track expenses, including those you can deduct from your tax liability. Similarly, it makes it easy to track profit and loss and, in turn, report accurate financial information to tax authorities.
Tips For Choosing A Business Banking Account
The essential things to consider include
Banks make money by charging fees to customers for transactions. You may come across different types of fees including
- Maintenance fees
- Deposit fees
- Withdrawal fees
- Transaction fees
- Foreign exchange fees
- Overdraft fees
It’s paramount to check what fees your banking institution charges and ensure you’re okay with it before opening your account. If not, you’ll likely face issues in the future.
Banking firms offer interest rates to customers that save money with them. Different firms offer different rates, so you can shop for which one you like. An emerging trend is that online business accounts offer more interest rates than traditional ones.
3.Minimum Balance Requirements
Some banks require a minimum balance to open a corporate account. You may also need to maintain a minimum balance each month; if you don’t, you’ll pay a monthly fee.
Ensure you’re comfortable with any minimum balance requirements your institution imposes before signing up with them. Fortunately, a lot of banks don’t even have such requirements.
Banking has largely moved online. Any bank not offering online services in this era will fall behind. Ensure that you have access to digital banking so that you can transact from anywhere.
With an online bank, you don’t even have to visit a physical branch to open an account; you can do everything from your phone or PC. They also enable instant transfers between you and your customers.
One of the best things about corporate accounts is that they offer integration with software tools that make it easier to run your business. For example, you can integrate your account directly with your accounting software, and any incoming or outgoing transactions will be automatically recorded. Similarly, you can integrate it with your tax software and prepare tax reports automatically.
Check for what integrations your bank offer, as they’ll make it easier to manage your finances.
Banks usually offer introductory perks and bonuses to lure new customers. For example, you could earn a small-time bonus for opening a new account or transaction fees will be waived for a specific period. You should consider these perks when choosing a bank.
A corporate account is essential when running any type of company. We have explained how they work and the most important things to consider before choosing a business banking provider. You have endless choices to pick from, so choose wisely.