In a recent study conducted by the Small Business Administration, it was discovered that 30 million small businesses operated in the United States. That number comprised 99.9% of businesses across the country.
While those businesses vary in the services they offer and the ways they operate, one thing that we’re confident could unilaterally benefit all of them is having business bank accounts.
Opting in to banking services for businesses offers several benefits. There are also pitfalls that entrepreneurs will want to watch out for to ensure that they don’t step into a bad deal.
If you’re thinking of opening up a bank account for your commercial venture, keep reading to understand key considerations that are worth mulling over before signing up for biz banking.
1. Have an EIN Ready
Before you take any steps towards opening your business banking services, you’ll want to have an EIN, which stands for Employment Identification Number. That number is like a social security number for your business and several banks will ask for it to complete your application.
The great news is that getting an EIN is free and can be done online. Simply head over to this IRS page to go through the process.
Note that for whatever reason, the IRS’s online application system only processes application requests during brick-and-mortar business hours.
2. Understand Your Reason for Getting a Business Account
Opening arbitrary bank accounts is never a good idea. The more accounts you have, the harder it is to keep track of your financial picture. Also, more accounts mean more opportunities to have your identity stolen.
With that in mind, we want to make sure you know your “why” before adding more banking services to your portfolio.
Are you trying to keep your business and personal transactions separate? Do you need to have a business bank account to complete a formal company registration process in your locality (you can click here for more information on business registration)?
Whatever your reasons are, make sure you have them before proceeding with your business bank account.
3. Take Intro Offers Seriously
As you start to browse prospective business bank accounts, you’re going to see a lot of introductory offers for business owners. Introductory offers are usually cash or points bonuses that aim to give account providers an advantage over their competitors in earning your business.
If you find an offer that seems attractive, read into it to understand any strings attached. For example, does the account require you to deposit and hold $10,000 in your account for three months to claim its intro offer?
Intro offer requirements will vary, so make sure you can meet them before committing to any particular account.
4. Look Into Reviews
Every business bank account you sign up with will look attractive as they work to court you. After you’re a customer though, you may find that your account goes cold.
Poor customer service, growing fees, an indifference towards your happiness: these are all things to watch out for and problems you can identify early on by reading online reviews.
Head over to popular bank and credit card review sites that allow users to share feedback. Look through that feedback and see if you can pull out any disturbing themes.
If feedback on an account you’re considering seems mostly poor, don’t be lured in by attractive sign-up offers. Turn away and find account services that’ll serve you year-round.
5. Avoid Fees
It used to be commonplace that every bank account, particularly for businesses, carried a bevy of fees, such as administrative monthly fees for holding a debit card, low-balance fees, overdraft fees, etc.
Today, competition is so fierce among banks that many of these fees have dissipated to provide consumers with a more attractive experience. Is the account you’re considering on board with that progressive agenda or are they still stuck in the fee-laden past?
It’s best practice to avoid fee-heavy institutions because they may very well end up costing you more money to use than their value supports. What business owner would want to work with a service that hurts them more than it helps?
6. Keep an Eye on Changing Interest Rates
For those of you that are thinking of opening up a corporate savings account with your bank, the interest rates they offer will be a big piece of your consideration. Some banks offer interest rates that are over 2% (these are rare in 2021) while others offer sub 0.5% rates (these are common).
What makes the interest rate puzzle more difficult is that many banks will pull you in with high-interest returns and then drop them shortly after you join their ranks.
Keep your bank honest by monitoring their interest rate changes, assuming they happen often. If you find that your rate drops below a certain threshold, take your money elsewhere if you’re legally capable of doing so.
The only legal barrier that might disable you from moving your money is that some banks/laws require money to sit in an account for a few months to prevent money laundering.
Business Banking Services Will Move You Towards Legitimacy
Every small business owner wants to feel more legitimate. Having banking services that are dedicated to your business can help you with that, which in our opinion, is something worth pursuing.
Could you benefit from separating your business and personal transactions? Do you think that having a business account could inspire you to take your venture more seriously?
If you’ve answered yes to those questions, use the advice we’ve shared and look to open your first business bank account today. We’re confident that you’ll be glad you did start business banking.
Banking as a business is what professional companies do. If you want to level up your startup or solopreneur venture, start utilizing business banking services.
For more advice on all things business and banking, our team welcomes you to explore the newest content on our blog! We publish a wide variety of helpful articles on banking, finances, taxes, fintech, and money management.
Visit the Finance section of the Everything Entrepreneur Blog right now to learn more about the best banking services and financial management solutions your business needs!