You may need to open a business account to manage the finances of your small business. The task may sound simple, but you may need to be careful and attentive so that you can avoid typical mistakes that many newbies often do. One of the most common of them is the choice of a wrong banking institution. You can take care of this problem by being fully aware of your business requirements and looking for a financial institution that can match them.
As a small company owner, you may understand that selecting the right type of checking account is necessary for successfully running your business and reducing its costs. Like others, you may feel tempted to organize your finances with a personal account without even realizing the challenges, such as not being able to keep a tab on earnings and expenses. With a business account, you not only can overcome this problem but also gain legitimacy. Additionally, it can also cut down personal risks. Opening a business account may not be difficult if you do your homework well.
Before you take a final call, make sure to find a financial institution that allows you to open an account without any fee, or provides waivers if they charge a fee. Anyway, reading their terms and conditions is quite essential ahead of opening an account. Also, after you become an account holder, keep a close watch on all the activities.
Free business accounts
The concept of free checking may look like a myth today because most of the financial institutions, particularly larger banks, don’t offer a personal account for free. Either you need to maintain a prerequisite balance in your account with the bank or deposit some money. Just imagine what will be the scenario if you needed to open a business checking account. You would need more money in your account to be eligible for free checking.
However, don’t get disappointed as you can find this provision in credit unions and a few local banks also. Credit unions focus on their customers, who are called members. They want to contribute to the growth of their communities, and their expenses are also quite less compared to banks. Hence, you can look for free services there. But do make sure to ask them a few questions to understand their utility for your purpose. These include:
- What is the monthly limit for transactions, and how much you charge for additional transactions?
- Do you send notifications for account activity?
- How can I deposit cash and checks?
- Do you offer all the business services online or I have to go to a physical address?
Monthly fee waivers
In case you don’t get an option of a free business account, you can still bring down your cost by availing fee waivers. Some credit unions can ask you to maintain a specific balance in your account to qualify for it. Some can also have different provisions to make your transactions cost-effective in different ways. For example, they can apply a nominal fee after you exhaust the transaction limit on multiple items in a month as against banks, which charge on the per-item basis.
Since this can be a time-consuming process, you may feel at a certain point in time to stay put with a personal account for your small company instead of the business account. It may not be an excellent decision on your part because personal and business matters need separate handling. At the same time, your business loss can any time translate into your responsibility requiring you to pay from your savings account for debts. You can avoid most of these woes by finding the right credit union for your needs.
Benefits of using a credit union for business needs
Nowadays, many people are turning to credit unions for help in this area. And you can also turn to one of these in your local area or region for assistance. Having a business account with one of the recognized bodies can prove beneficial for your small business for multiple reasons.
A comprehensive range of business services
Like larger banks, you can enjoy a wide variety of business products and services with credit unions for affordable charges, though. You can get loans, credit cards, checking, and investment options hassle-free. Also, these non-profit organizations can help you borrow money even if your credit history is messed up by working together with the best solution for your purpose.
When you join a credit union, you become its member. And every member gets higher rates on their money market, checking and other accounts. Besides, you can also secure a lower interest rate loan for your business compared to anywhere else. As a business owner, these savings may have a significant meaning for you.
Another advantage that small businesses can get by being a member of the credit union is that they can find relief in transactional charges. Usually, banks apply fees on multi-item transactions even though you may not have reached or crossed the monthly limit. But these types of financial institutions can provide this service for free up to a specific threshold.
Customer service and online technology are two critical factors that draw business owners to large banking institutions. However, you can expect to enjoy the same convenience at these smaller non-profit institutions also. You can perform various activities on the go through the online app or website. These include:
- Direct fund transfer
- Check deposits
- Bill payments
- Account management
Credit unions are generally community-focused entities. They work towards its growth. By running a small business, you also serve your community. Hence, you can quickly align with them. However, make sure before you open a business account with any of them, you analyze their services and products carefully. For an idea, you can check the ratings of the members and what they are speaking about their offerings. Since you’ve got a business interest, look for a review that gives you a detailed insight into their business services. Also, choose the one that has got federal government backing and belongs to a broader network.