Choosing the Best Business Checking Account

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Most businesses hope to have something unique that sets them apart. A slogan, a product, a fun brand, and so on. But, one thing every new business, small business, and even big corporation has in common is a need for the best business checking account.

There's a big chance you already have a personal account with a credit union or U.S. bank. But, personal accounts differ from business accounts in a number of ways. To help your business meet its banking needs, let's take a look at what a business checking account is and what makes for the best business checking account.

What is a business checking account?

A business checking account operates similarly to a personal checking account, at least on the most basic level — it contains your business funds, allows for transfers, and offers credit or debit card usage. But, a business account is quite different in purpose from a personal account. And more importantly, business accounts are necessary, even for small business owners.

Beyond your basic banking functionality, business bank accounts can enable business owners to have multiple debit or credit cards for employees, allow unlimited ACH transfers, help build business credit, and most of all, separate your personal finances from your business finances.

The last point is an especially important one. Separating your personal finances and business finances is something nearly all business owners should do. Separate finances can make tax time easier, prevent misuse of personal and business funds, improve cash flow, and give you and your bookkeeper a clearer view of where your company is financially.

The first step toward separating your finances is determining what the best business checking account looks like based on your needs.

What makes the best business checking account?

While nearly all businesses have the need for a business checking account in common, not all business checking accounts are created equally. There are a few categories you should consider carefully that will help you rule out many of the available banking options. It's also important to keep your own business needs in mind when reading through these points, as certain features or perks may not be as important to you as they are to another business.

Services and functionality

No bank account can be the best without a proper foundation. Few banks will offer every single service available, but if you can find one with most of these services and functions in place, you can rest assured that your account has a solid foundation.

  • Online banking: Online banking is a must in today's world of business banking. With online banking you can check your account balance, initiate transfers, and make check deposits in many cases. This allows you to stay productive while still staying on top of your finances. If a bank doesn't offer online banking, it's likely a deal breaker.
  • Online bill pay: Some banks will allow for online bill pay. This is an integration that enables you to set up automated or one-click bill pay, allowing you to pay recurring bills with ease. 
  • Business credit cards (preferably with rewards): One of the main reasons many businesses get an account is to have business credit cards. Depending on the cards offered, a bank may or may not be the right fit. Ideally you want to find a bank with business credit cards and rewards, as these rewards can be used to stretch your dollars even further. When you have a card with rewards, you really can spend money to make money.
  • Business debit cards: Business debit cards can be useful for businesses with numerous employees, especially when you're sending them on trips or errands. With a business debit card you can manage employees' access to your finances while still freeing them up to help represent your brand, purchase supplies on a trip, and so on.
  • Mobile banking: As a business owner, you'll be on the go a lot. Maybe not at first, but over time you'll likely find yourself needing to go to conventions, meet with clients, and travel for business. Mobile banking allows you to stay on top of your finances, manage cash deposits and deposit checks, issue transfers, and more — all while on the move.
  • Unlimited electronic deposits and ACH transfers: Most businesses will need to make electronic deposits and ACH transfers as part of their operations. Both of these services can cost you quickly if you have a limit and transaction fees. If possible, find a bank with unlimited deposits and ACH transfers to ensure you don't run into excessive fees as your business scales. If you can find a bank that doesn't have a minimum deposit requirement to keep your account open, that's even better.
  • Low interest rates: If you're looking at business checking accounts, you likely want a business credit card. Find one with a low interest rate to avoid throwing money away on interest.
  • High APY: Besides a checking account, you can look for a bank that also offers business savings accounts. Ideally, you'll want one with a high annual percentage yield (APY), which will allow you to earn money in interest over time.
  • Paperless statements: The ability to forgo paper statements for paperless email statements can be a nice way to cut down on paper usage. But, there is something to be said for paper statements when you're preparing for taxes and trying to stay on top of your monthly cash flow. Think about the role paper statements play in your current life before deciding whether you want to go paperless or not.
  • Locations available: Think about your business and the likelihood that you’ll need a physical location. If you need to regularly consult with your banker, you may want to consider a bank with physical locations near you. But, online banking has become very popular and many banks offer great customer service online, so don’t let a lack of physical locations deter you.

When it comes to bank services and functionality, there's a lot to be on the lookout for. Again, think about what you're hoping to get out of a business checking account. You may be able to live without some of the above features, but others will be must-haves.

Monthly fees

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Nobody likes monthly fees (unless you're the bank). While a low fee here or there won't crush your business, bank fees can quickly snowball and turn into a financial problem. Ideally, you'll want a small business checking account with no fees, or as few of the following fees as possible.

  • Monthly service fees: Also known as monthly maintenance fees, a monthly service fee is essentially a cost for simply having the account with the bank. Many premium business accounts will come with monthly service fees, so this one may be tough to avoid. Do a quick Google search and see what similar accounts are charging to get an idea of whether you're looking at an account that costs too much.
  • Minimum daily balance fees: It's common for accounts to require a minimum daily balance — an amount of money that you need to keep in your account at all times. If you don't meet the minimum daily balance, you'll have to pay a minimum daily balance fee. Like a monthly service fee, do a comparison check to find an account that doesn't charge too much or have strict minimum balance requirements.
  • ATM fees: ATM fees are generally no more than a few dollars, but if you have numerous employees who need to travel and you yourself travel regularly, these fees can add up. Either look for a bank with a large network of free ATMs or one that offers reimbursement for using other ATMs. 
  • Overdraft fees: Overdrafting is never in anyone's plan, but it can happen. If possible, find a bank that has overdraft protection or overdraft forgiveness. The last thing you want is to realize you're out of money and you're being charged for it.

When looking at business bank accounts, be aware that some of the above fees may be rebranded to something company-specific. Read the fine print and try to find an account with as few monthly fees as possible.

Perks offered

Many banks and credit unions will have unique perks that they offer their members. While not entirely necessary, the best bank account will be one that rewards you for using it. 

If you can, find a bank that gives you reward points for using your credit card, traveling, staying at select hotels, and more. These kinds of perks can quickly add up as you travel and use your card, and in turn, they can allow you to pay down parts of your credit card bills with points. Some banks will even partner with local restaurants and certain hotel chains to offer you reduced prices.

Cash management account: your happy medium

If you’re still on the fence about a business banking account, you might want to consider a cash management account (CMA). A CMA is not a bank account. But with a CMA you get the functionality of several account types all bundled into one. Essentially, a CMA is a hub where you can manage your funds, initiate transfers, process deposits, etc. With some CMAs, like Brex Cash, you can even grow your money via a high-yield growth account.

Even if you end up with a business checking account, a CMA can be a great account type to open alongside it. Your checking account and credit card will integrate seamlessly with your CMA, and you’ll be able to take advantage of the CMA's growth. It’s a win win.

The best account is the one that fits your business

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There's no single best bank account. At the end of the day, the best bank account is one that fits your business and your needs. Consider the above points, think about your business goals, and consult with your business partners or a financial advisor. The decision is one only you can make, and with enough research and business planning, you can arrive at the right one for you and your company.

Brex Cash is offered by Brex Treasury LLC, a registered broker-dealer and member FINRA and SIPC. Brex Cash is a program that allows you to elect to automatically place your cash balances into certain money market mutual funds. Brex Treasury LLC is not a bank, your Brex Cash account is not a bank account, and it may not offer all of the services and protections that banks may offer. The cash you deposit into your Brex Cash account will not be stored at a bank. 

You could lose money by investing in a money market mutual fund. Although the fund seeks to preserve the value of your investment at $1 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency. The fund's sponsor has no legal obligation to provide financial support to the fund and you should not expect that the sponsor will provide financial support to the fund at any time. 

Brex Treasury LLC is not an investment adviser, and therefore investors should consider the investment objectives, risks, and charges and expenses carefully before investing. See program disclosures and the applicable fund prospectus for details and other information. Contact us for a copy of the fund prospectus and recent performance data. You should read the prospectus carefully before investing.

Brex Treasury LLC does not charge transaction or account fees. However, money market funds bear expenses and fees. Fees are subject to change. Yield is variable and may fluctuate as market conditions change.

Brex Treasury is a member of SIPC, which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at www.sipc.org. Securities in your account are protected up to $500,000. For details, please see www.sipc.org

This is not an offer, solicitation of an offer, or advice to buy or sell securities, or to open a brokerage account in any jurisdiction where Brex Treasury LLC is not registered.

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