How to choose a bank for your small business
This article is for anyone starting their business from scratch. We’re talking about a new entrepreneur or hobbyist who does not have enough money for a down payment on their first business bank account, nor do they want to.
Step 1: Google “small business bank account.” This will place you in front of all the banks eager to do business with you. Which is ALL the banks! So be sure to read the fine print before jumping on the first bank’s link. In fact, the first several results on Google will be paid for. Take a look at a few of the sites in front of you to get acquainted with the process.
Many of the options available online claim they are for small business owners, but will require a 5000 dollar deposit to begin. We’ll get into this later, but in my opinion, that is a high price for small business owners who are just starting out. Also, some banks will offer deals such as 200 dollars back etc. Just make sure you actually qualify and are satisfied with the other features or fees they offer before jumping on click bait for a few bucks.
First and foremost, scroll past the “free $300” pitches and check the minimum requirements to open a bank account. If you don’t meet the minimum requirements, there’s no sense in wasting anytime hoping for or reading about a cash offer. If you do meet the minimum requirements for a bonus, then excellent! But it’s not always that easy. As the saying goes, “there’s no such thing as a free lunch.”
Beware of monthly maintenance fees. I honestly don’t understand what this is for. Everything is digital these days, so it’s not like the bank has to hire someone to sweep your bank account vault or roll your coins. Don’t pay another bill if you can avoid it!
Make sure you will not be required to keep a specific balance that is higher than you can afford. If you’re a single member LLC, you might need almost every dollar in your business account at any given moment - at least, in the beginning.
Most banks offer “online banking” as a perk. While it does make keeping track of transactions more convenient, there is risk that the bank could lose this information. Plan on getting quick books or use an Xcel sheet to balance your checkbook. My first business used online banking with Fidelity - and it was great. However, when the bank merged with Ameris, all of the data I had painstakingly collected in preparation for tax season was lost. This cost me many hours of time to rebuild from scratch. On that note: always keep a paper receipt (or email.) Without receipts, I would have been up shits creek with no paddle come tax season.
Now here are the 6 main things to look for in a free business checking account:
1) Opening Deposit and Balance Requirements
2) Maintenance Fees
3) Monthly Transaction Limits
4) Bank Size and Branch Locations
5) Online and Mobile Banking
6) Access to Other Business Services
In these COVID19 times, I would also check to see if there are drive thru banking options in your area as well local ATMs in case the main branch is closed or you do not feel safe entering the building. Also check out the bank’s mobile app reviews. The app will save you a lot of time and headache and can help you monitor things while you aren’t at your computer, and, it is an excellent tool for social distancing.
For my design business, I chose BB&T. Which is now Truist Bank. BB&T did not require a minimum deposit or minimum daily amount, and allowed me to sign up for an account online all while watching my daughter jump in her bouncy house. Boom! That’s how we roll at Bardis Design!
Hopefully I’ve helped save you some time and effort with this process. If you liked my article, please share it with your friends/Facebook/LinkedIn/ etc.