Opening a business account is quite an important step especially if you are just starting your business. Having the right business account can help you manage your company’s finances better. However, not every business account is the same; you need the right business account based on the needs of your business in order to thrive in the business world.
In this article, we will cover all that you need to know about choosing the right business account and the business account opening process, and how you can choose the right one for your business needs. But before we get into choosing the right business account, let us understand what exactly a business account is and what you can use it for.
What is a business account?
A business account is the financial home base for your business. It is where all of your business transactions take place. The following are the business operations for which you will require a business account:
- Paying vendors and suppliers,
- Paying employees salary
- Marketing and advertising expenses
- Receiving sales revenue
- Receiving funds from investors
- Paying taxes
- Ordering office supplies
- Ordering inventory
- Applying for business loans and grants
Types of business accounts:
Now that we understand what a business account is, let’s examine the different types of business accounts that help run a business.
There are three main types of business accounts:
- Business current account: A business current account is where all of the essential business transactions take place. You will be using your business current business account for all the transactions that we have mentioned before. Most business current account providers also might offer business saving accounts so that you have the opportunity to save money for your business as well.
- Business savings account: Maintaining a separate business account can be quite beneficial to businesses. With this account, you can save money for your future business goals, build an emergency account for your business, and earn interest on your deposits. The only thing to be noted here is that this account is different from your business’s current account.
- Cash management account (CMA): A cash management account is a combination of a savings, current, and investment account. If you are looking for a more strategic way to manage your cash and want a higher interest rate on your business savings, a CMA is a good option for your business.
How do you decide which business accounts suit your business?
Businesses now have a huge range of options for business bank accounts. You have traditional bank offerings to financial institutions that cater to the needs of businesses of different sizes. Here are a few pointers to keep in mind when settling upon a bank account provider.
- Interest rates: Interest rates play a crucial role when deciding on the perfect business account for your business. For this, you need to research and compare the different offerings of different financial institutions. Having a competitive interest rate will definitely help your business grow in the long term, but you also need to consider the pros and cons of each financial institution’s offering.
- Account features and services:
Services and features vary from financial institution to financial institution. Every feature and service offered by different financial institutions is unique and different, but most of them offer the following services:
- Bill Payment
- Online and mobile banking
- Wire transfer
- Debit card
- Cheque
It is not necessary to get all of your features from one financial institution; instead, look for one that provides you with the maximum number of services that complement your business model.
- Service fees:
For this, too, you need to do your research and compare the service fees from different financial institutions to see which one fits your budget. The following are some of the services you will be charged for
- Minimum balance fees
- wire transfer fees
- maintenance fees
- ATM fees
- overdraft fees
- ATM access:
It is always advisable to check the size of the ATM network and inquire about possible out-of-network ATM fees.
- Transaction limit:
A few financial institutions offer accounts that allow a limited number of transactions in a given period of time, such as daily, weekly, or monthly. This may also include caps on the number of withdrawals, deposits, bill payments, or transfers between the accounts and the transfer amount. If your business often processes a high number of transactions, you will need a provider that offers unlimited transactions.
Conclusion
Choosing the right business account is essential for managing your company’s finances efficiently, ensuring smooth operations, supporting growth, and aligning with your business needs for long-term financial success.
