Business banking is a vital necessity of running a company. Owners need to maintain separate bank accounts to obtain accurate income and expense reporting, as well as to deduct allowable exemptions from corporate tax returns.
When companies merge business banking with personal checking accounts they could lose out on options to deduct business expenses and will likely end up being audited by the Internal Revenue Service.
A variety of choices are available for setting up business bank accounts. Owners can select from basic accounts to investment portfolios and apply for credit cards and business loans.
Practically every major bank offers advanced technology that allows companies to integrate accounting software, such as QuickBooks or direct deposit payroll services with their checking account.
Integrating accounting software programs with business accounts can help owners conserve time and money. Additionally, many of these programs have mobile apps that let owners conduct financial transactions via mobile devices, as well as being able to access accounts via computers at home or work.
It usually costs more to setup business checking accounts vs. personal accounts. Banks typically set higher opening deposit requirements and charge higher transaction fees. It is not uncommon for major banks to charge companies' monthly service fees, along with fees for ATM transactions, wire transfers, direct deposits, and check overdrafts.
Over-drafting checking accounts not only incur bank fees that are sometimes as much as $35 per returned check, the vendor can also assess an overdraft fee. A good preventative measure is to establish an overdraft account that connects to a savings account or credit card. If transactions exceed available funds, money is automatically transferred from the established overdraft source.
It can be very advantageous to spend time researching major banks, local banks, and credit unions. Community banks can be a good option for business owners that need small business loans, but don't have the best credit rating. Community banks tend to be more receptive to helping small business owners obtain financing than major financial institutions.
On the other side of the debate, national banks usually have a broader selection of banking products than local banks. Big banks offer a broader range of financing solutions to help small business owners obtain startup loans and working capital. They also tend to have more sophisticated accounting software integration options to help improve efficiency of payroll and invoicing systems.
Before beginning the quest for the perfect business banker, it's helpful to develop a list of short and long term goals to decide what types of services and banking products will be needed over time. Spending time locating the best bank is worth the effort because changing banks at a later time is a very time-consuming and cumbersome process.
Business owners that need working capital might find it better to work with local community banks or credit unions. It is considerably easier to develop working relationships with personnel of local banks than big banks.
This isn't to say that the big players aren't willing to help small business owners. It's just that major banks have tighter lending criteria and don't take the time to look at the big picture of the small business owner.
Comparison shopping business banking services can aid owners in finding affordable services and help determine which entity will be the best long term partner. One consideration is community banks often participate in events to raise awareness of local businesses. These events can be very beneficial, so be certain to ask bankers about the types of promotional events they offer.
