Best Business Banks: Which Should Your Company Use?

Opening your first business bank account is essential for setting up a small business. It allows you to keep the company's spending separate from your own so that you can better track its finances and pay its bills. It also helps establish a credit history for your company if you use your relationship with a bank to establish basic credit lines or to take out a small business loan.

Business Banking

Registered companies have unique tax burdens, income cycles, and accounting cycles. They need accounts that interface with electronic payment systems and process high-volume transactions. That's why learning how to create a business bank account differs slightly from learning how to set up personal savings.

Accounts for businesses require proof of the company's ability to operate, usually in the form of an employer identification number. The EIN is issued upon request by the IRS and provides an identifying number the company can use to pay taxes, including but not limited to its payroll taxes. You may also need proof of your business license or general liability insurance.

Types of Business Bank Accounts

Almost every small business needs a basic business checking account. Most businesses also need a merchant account because that allows for credit card payments and other forms of electronic payment like ACH direct debit. Merchant accounts are typically linked to a business checking account that receives the payments after they clear processing. Some business banks also offer processing services to small businesses, which helps consolidate your financial services and can be a way to save money if you are offered the right terms.

Some businesses also opt for savings accounts to separate cash reserves from working capital. This is a good idea; although it is not strictly necessary, it helps you better track and control your company's spending. It also means you have to transfer money out of reserves to access it, which means taking note of your reduced burn time. That can be important as you weather slow seasons, and every company has them.

Top Business Banks

Some banks place more emphasis on business accounts than others. Local community credit unions, for example, often offer businesses geared toward first-time business owners because their primary membership base is still individuals and families. Large national credit unions and banks tend to have more resources to offer businesses and a better ability to grow with them. Hence, their terms for opening a business bank account are often better.

• Chase

• Consumer's Credit Union

• Wells Fargo

• U.S. Bank

These banks have long, stable operating histories and well-developed business banking programs. They even have staff who can teach you how to open a business bank account and how it differs from personal banking.

Things to Consider When Choosing a Business Bank

The first consideration is how accessible the bank account will be to your business. If you only need online banking, a bank with no physical locations near your operation is fine. However, many companies do need a place to drop a deposit pouch after hours. You should also consider whether you will have regular financing needs the bank could support and whether you need additional merchant services for payment processing.

Key Takeaways

Opening a business bank account is not much more complex than opening a new personal account, but it does require you to have your company's identifying information ready. Consider all your needs and try to find a bank that fits them so you do not need to split your services among many providers. The best business bank accounts let you consolidate your services to make banking easier.