4 kinds of free business checking accounts for better banking

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When small business owners face an average of $451 in bank account fees each year, it’s no wonder free business checking accounts are in demand. Frequent fees burden businesses and don’t often translate into improved service or better features.

The good news is that a free business account lets entrepreneurs focus on their company instead of tiptoeing around coercive checking account fees. Today, you can find excellent free checking accounts at four main types of financial institutions. 

First, let’s go over what “free” really means in business banking. We’ll explain a few ways to get a basic checking account — and why a cash management account could be a better option for your business. Lastly, we’ll walk through the crucial services and common perks of free business checking accounts.  

2 different definitions of “free”

When financial institutions advertise a free business checking account, they could actually be referring to two different scenarios. It’s important to understand the difference so you know which costs you’re committing to and whether the account fits into your startup budget. Here’s the difference: 

No monthly service fees

Some free checking accounts have zero monthly service fees, also called monthly maintenance fees. That means you won’t pay $10 to $20 per month to simply have an open account. Although it may not seem like much, most small business owners know what they could do with an additional $120 to $240 for the year. 

Generally, your account’s fee-free status isn’t tied to any specific criteria, like a minimum daily balance requirement or qualifying account activity. That makes these accounts attractive for new or small companies with limited starting capital and fewer transactions. 

That said, a business checking account with no monthly fee may still include transaction fees or other account rules. For example, there could still be withdrawal limits, cash deposit limits, in-network ATM fees, bill-pay fees, and so on. If you exceed these thresholds or can’t meet other requirements, you could still see extra charges. 

Waived monthly service fees 

These free business checking accounts have strings attached. The bank or financial service provider waives some fees — as long as you meet specific criteria. 

Most commonly, banks require you to maintain a certain average daily balance over the course of each statement cycle. This amount can range from $100 to $25,000, with conventional big banks having the steepest requirements. If you dip below this threshold, the monthly service fee is essentially reactivated. 

Some financial providers will drop certain fees if you use their merchant services or hold a personal account with them. To reduce charges on premium accounts, for instance, business customers may have to open a business credit card and make $250 in purchases upon account approval. Simple actions like signing up for paperless billing can also wipe out charges. 

As a result, these kinds of free business checking accounts are easier to maintain for high-spending, established businesses.

To summarize, “free” isn’t always synonymous with “fee-free.” But some financial providers stand apart from the rest, eliminating pesky monthly charges and tacked-on transaction fees completely. We’ll highlight those options shortly. 

Why you need a free business checking account

A business bank account is a pillar of operations whether you’re an early-stage startup or a high-volume ecommerce business. It offers unique benefits and different protections than a personal checking account. And because it’s the cash account you’ll use most often, you could unwittingly get hit with fees on the transactions that come up most. 

Let’s review the ways in which the checking account is the workhorse of your business and why switching to free checking is worthwhile: 

  • You can securely store your earnings and funds from small business loans and investors. 
  • Your team can access funds using multiple business debit cards for day-to-day spending. 
  • You can set up automatic bill pay and pay suppliers with card to earn rewards and enjoy net payment terms.
  • You can clearly separate your personal and business expenses and simplify your bookkeeping.
  • You can identify and calculate tax deductions — and avoid IRS penalties — more easily at tax time.

Next, we’ll share tips on where you can find the best free business checking accounts. 

4 places you can find your free business checking account

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Your business deserves an account provider that can support your business needs and evolve with the demands of your company. You can open a small business checking account at a brick-and-mortar bank, online-only bank, or credit union. Non-bank financial institutions also offer business accounts with high interest rates and a bundle of checking, savings, and investing tools — but because these accounts don't come from banks, they will not be bank accounts. 

Below, we’ll compare each account provider and give you a checklist for finding the right account. 

1. Traditional big banks

National and global big banks provide accounts with the standard array of basic business checking services, like debit cards, checkwriting, and ACH transactions

If your business accepts cash, you’ll particularly benefit from the wide network of physical branch locations and ATMs for cash deposits. You can expect other convenient services like currency exchanges and safety deposit boxes. Some banks also offer mobile apps, investment tools, and payment processing. 

Traditional banks generally condition their free accounts on minimum daily balance requirements. They tend to have higher opening deposit minimums, too. We should note that it’s difficult for businesses less than two years old to be approved for a business bank account. In addition, some large banks only offer accounts to LLCs, partnerships, and corporations.

2. Local banks and credit unions

Community banks and unions may not have the national presence or service variety of big banks, but they’re still a good bet for free business checking accounts. With fewer branches and costs, these institutions have more leeway to lower account costs. Credit unions typically waive monthly maintenance fees for their members.

If the bank or credit union has a shared ATM network, cash deposits can be just as seamless as with large banks. The personalized, face-to-face service is another advantage for some business owners. When you’re working with a local bank — and the same team of representatives — it may be easier to qualify for vital small business loans later on.

3. Online-only banks

A majority of business owners have to visit a physical branch to apply for or set up simple financial services — but most wish they didn't have to. That’s where online banking comes in. 

Today, online-only banks rival brick-and-mortar banks in areas from customer service to daily banking and savings funds. Low overhead costs allow digital banks to promise a checking experience with no fees. In most cases, you’ll enjoy higher annual percentage yields (APYs), too. Application and approval can take just minutes, making this option especially attractive to companies who need a fast startup.

Online service providers tend to be on the forefront of innovation, offering user-friendly services like mobile check deposit, bill pay, software integrations, and more. Be sure to examine your ATM and deposit options if you deal with cash regularly.

4. Non-bank financial service providers 

The old banking system is changing rapidly, opening up more efficient ways for entrepreneurs to manage business finances, earn interest, and get access to credit. With the rise of alternative financial service providers, you don’t have to choose between paying unnecessary fees or waiting years to qualify for a decent checking account. 

Experience a fee-free world with a cash management account (CMA) like Brex Cash. While it's not a bank account, it combines the services and features of checking accounts, savings accounts, and investment accounts. 

A Brex Cash account has no account fees, transaction fees, ACH fees, or wire fees. That makes it a one-stop shop for making purchases, paying vendors, tracking cash flow, and reporting financials — all online. 

With our CMA, the excellent interest rate isn’t a perk, it’s a feature. There are no account balance requirements, meaning you earn industry-leading interest on every cent in your account from day one.

What to look for in a free business checking account

All business checking accounts should include baseline tools and features like business credit cards and debit cards, checkwriting, direct deposits, wire transfers, online banking services, and account integrations. 

Ultimately, you’ll need to evaluate each contender against your banking needs. Ask yourself questions like: What minimum account balance can I reasonably meet each month? What is my average monthly transaction volume (both debits and credits)? Will my need for cash deposits change dramatically over the next three years?

Here are some questions you should be able to answer about the free business checking accounts you’re considering: 

  • Is there a minimum opening deposit? Make sure you can front these funds and maintain that balance for as long as needed.
  • Is there a minimum balance requirement? This is the main way some banks waive their monthly fees or levy charges.
  • How many free transactions do I have per period? Some free accounts include unlimited transactions or unlimited electronic deposits. 
  • Is there a limit on cash deposits each month? Fees are usually assessed after you reach a certain monthly threshold. 
  • How are my funds protected? Most funds are either FDIC- or SIPC-insured. Fraud monitoring and prevention tools should be included. Also, see if there’s overdraft protection that can offset an insufficient-funds fee. 
  • What mobile banking services are available? Look for a free, intuitive mobile app with standard account management features and remote deposit captures. 
  • Are there any unique account perks? Most business checking accounts don’t earn above 1% APY. If high yields are important to you, look for a cash management account. Other perks include introductory bonuses, built-in bill pay, and free checks. 
  • What software does this account integrate with? Simplify your financial management by syncing your account with tools like QuickBooks, Apple Pay, and payroll services. 

Although you’re “banking” on a free account, don’t forget to estimate potential fees and add them into your budget, just in case. That way, you’ve got the right amount of cash on hand. 

Skip the fees, but read the fine print

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Across the board, free business checking accounts offer essential time and money savings for businesses, new and established. How free your checking account really is comes down to which financial institution you choose. And although it's not a bank account, a cash management account may actually be the no-stress, high-yield alternative you’re looking for. 

No matter what, study the fee structure for any account you consider. If you need help understanding rates and charges, don’t hesitate to contact a bank representative. 

You’re on your way to better business checking. When you’re ready to apply for a business bank account, use this handy checklist to prepare your application materials.

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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