How to choose the right business checking account

How to choose a business checking account: key factors to consider

If this is the first bank account you’re opening for your business, not only do you have to choose a checking account type, but you also need to decide which institution to bank with. Keep in mind that your choice may depend on the way you do business. For example, if your company accepts cash payments, your bank should be nearby and provide a safe deposit box. Or, if your business operates outside normal working hours, ensure your bank has 24/7 customer support. Keep your business needs in mind as you review these key features of a checking account:

1. Partnership now and in the future

When choosing a bank to manage your business income, you want to look for a partner who both supports and understands your situation. Before signing up for a checking account, ask to speak with a business banker. Do they understand your market or the needs of a small business? What other resources do they offer for business owners?

You’ll also want to ask about any products and services they offer for the needs your business might have in the future. What options do they have if you need emergency funds? Ask about opportunities to integrate your operations with their tools. Does the bank offer payment services, such as a point-of-sale system? Are there ways to easily migrate information to your accounting tools? Look for ways your relationship with the bank can benefit your business, rather than complicate it.

2. Opportunities to grow

The financial needs of your business are only going to grow as it matures. Think ahead when choosing the right checking account. What savings accounts are offered? What interest rates are offered? With high-yield account options, there may be opportunities to earn interest. However, be sure to weigh the interest earned against any extra fees you might incur.

3. Limited fees

Protect every penny by being aware of any fees associated with your business checking account. There are several reasons accounts charge fees, including funds dipping below the minimum required balance, overdraft protection, using unaffiliated ATMs and closing your account; you could also get a fee simply for account maintenance.

Before making your decision, do a rough estimate of how much money you plan on keeping in your business checking account. Sometimes maintenance fees associated with the account are waived when you keep a minimum balance, so be sure to ask about all stipulations and rules associated with the account.

Avoid debit card fees

Make sure any checking account you open comes with a debit card that allows you to withdraw and deposit money at the bank’s ATMs for no additional fee. Your checking account should also come with checks that you can deposit in person or via a mobile app. While having physical checks on hand may seem outdated, it’s better to be safe than sorry.

Factor in transaction limits

Most checking accounts limit the number of transactions you can make within a specific period. What usually happens is that if you exceed your limit, you will be charged a fee. Consider how your business operates – how often do you estimate you’ll be making purchases or withdrawals? Be generous with your estimate for added wiggle room.

Overdraft protection

Speaking of fees, some banks are starting to waive overdraft fees and many checking accounts come with overdraft protection, which can shield you from extra charges. Overdraft protection works by allowing you to link your account to a backup source of funds so that funds can be transferred to your checking account in case a check, debit card or ATM transaction exceeds the available balance in your account.

4. Digital banking options

In today’s busy market, banking is often done on the go. When choosing a bank for your business checking account, look for one that offers mobile and online banking options to make managing your finances as convenient as possible. Your bank should have an app or mobile-friendly website that allows you to view statements, scan and deposit checks and pay bills virtually.

5. Automated banking tools

As a business owner, you’re well aware of how true the phrase “time is money” can be. Automating tasks is one way business owners can get some of their precious time back, such as automating recurring payments. With automation, business owners can skip manual, repetitive day-to-day activities and focus on higher-yield tasks such as planning business strategy or marketing initiatives. While you may not see an immediate need for automated tools, having access to them should be a factor in selecting a checking account for your business.

The best business checking account

In summary, these are the key features of a good business checking account:

• A minimum balance requirement that aligns with your projected cash flow. 
• Digital banking options, such as an app or mobile-friendly website. 
• Automated banking tools.
• Minimal fees associated with the account in relation to interest rates.
• A debit card with no additional fees, along with checks available for deposit.
• Partnership opportunities for future growth, including integration-ready tools and interest-bearing account options.

The bank you choose will likely offer multiple checking options, from solutions for small businesses to nonprofit business accounts. The biggest differences between business checking accounts typically lie in transaction limits and fees. Weigh these features of a checking account against your projected financial needs when making your decision.

How to open a business checking account

Once you’ve chosen the account that works best for your business, it’s time to apply. Whether you open a business checking account online or in person, you’ll be asked to provide some documentation, including (but not limited to):

• Business Taxpayer Identification Number: You’ll need your business’s Employer Identification Number (EIN) or tax ID number, or your Social Security number if you’re a sole proprietor.
• Business formation documents: This may include Articles of Incorporation, Articles of Organization, or a charter or a similar legal document that indicates when your company was formed; this is not required for sole proprietors.
• Identification: Government-issued photo ID and Social Security number for you and anyone else authorized to sign checks or make transactions on behalf of your organization.

Want to learn more about what you’ll need to apply for a business checking account? Go through our application requirements checklist.

Still can’t decide which checking account is best for your business? Use our checking recommender, or visit your local U.S. Bank branch to talk to a banking expert about how to choose a business checking account.

When starting a business, choosing the best business checking account doesn’t have to be complicated. Being well-informed about your business’s finances and the features of different account offerings will help you make the best decision with confidence.