So, you want to open up a new business checking account but don’t know the first thing about numbers? Then you’ve come to the right place. You’ve taken the first step; you’ve set up and registered your new small business and now it’s time to sort the finer details. Well, before you go signing your life (or your finances) away, you’ve got to take a look at a couple of things first. We’ve put together a list of what not to do when opening new business checking accounts, so read on to save your bacon!
Don’t choose the wrong bank
Let’s start at the beginning. Before you can even begin thinking about setting up a business checking account, you’ve got to start with a seemingly simple task. That task is choosing your bank. The right bank is a very important decision, so you’ve got to make sure you pick the one that suits the needs of your business. If you are going to open a business checking account, you need to research.
Research is the most important and eventually rewarding thing you can do in terms of finding the right bank.
Fees – fees are the most important thing to compare when choosing your account. You need to check if there are any hidden fees, or fees that kick in after a few weeks or months. Your best bet is to try and find a free checking account. There are some banks that specialize in small businesses, and they know their stuff, so use their expertise! They might even surprise you with things you didn’t even know you needed. They might have special start off offers that will give you a few months fee-free to get you off the ground!
Don’t combine your accounts
This one might seem like a no-brainer, but it’s a very common mistake people can make when they’re just starting out. If you mix your household finances, and your business ones, you may end up with some strange looking business receipts. You might find yourself questioning a lot of your costs, so this one is usually a no-no. Create an entirely new business bank account for your small business and you’ll find you’ll save yourself a lot of trouble – especially when it comes around to doing your taxes!
Don’t bring the wrong documents to your appointments
Again, it seems like a no-brainer, but who really knows what to bring to these things? You may be surprised at the number of people who turn up to banking meetings with the wrong papers. The bankers probably won’t be your biggest fan if you do that, but not only that, it can elongate the process if you’re not properly prepared. So, what do you actually need?
- Personal ID
- Professional Licence
- Employment Identification Number (EIN) and Name Registration
- Articles of Incorporation and Banking Resolutions
- Expected Cash Flow Numbers
Don’t forget you need a check-signing authority
When you write out checks, you’ll need to have another person to sign them. Too many people have made the mistake of not planning check-signing authorities when setting up their business accounts. The person or people you choose need to be people you trust 100%. Remember that they have authority over your business account payouts as well as you.
Don’t fall short of your minimum monthly balance
Nobody likes fees. Well, nobody except the people giving them out, but that’s a different story. How can you avoid this, we hear you asking? Well, some banks let this kind of thing slide if you keep your balance over a certain figure. It always pays – excuse the pun – to have a couple of hundred dollars in your business bank account just to stop from hungry bankers sniffing around for ways to make you pay more than you need to. Don’t let this happen. Don’t let your checking accounts fall short, or it’s likely some banks will pounce and you’ll be paying out a lot more than you originally expected.
While all of these tips warn you what not to do when setting up a traditional account, they also translate to online accounts. If you prefer to do your dealings online, check out how to figure out if online banking is the best choice for your small business.
Online Business Checking Account
The greatest thing about online banking? They’re always open! This is so convenient for small business owners who may need to access their accounts at any time of the day or week! Lack of overhead costs for online banks means that these savings can be seen in your account fees. Again, research is key when setting up business checking accounts online; some online banks do not allow cash deposits. So, if your business will be dealing in cash a lot, an online account is probably not your best choice.
Featured Image: Thinkstock/ Minerva StudioPosted on May 5, 2023