A business bank account is necessary if you plan to join the estimated 33.2 million small businesses now functioning in the U.S. Choosing the best type of business bank account can be challenging. Because they all act differently, some are better than others in particular contexts. Here’s a look at several business bank accounts in case you need clarification on which is best for your firm.
Savings Account
The business checking account is one of the most popular business bank accounts. It functions generally in the same way as a personal checking account. Knowing that these accounts accept deposits and are FDIC-insured for up to $250,000, you can have peace of mind.
The entry barrier is also sometimes low because beginning deposits are frequently more doable. Additionally, you receive unrestricted access to the funds and can manage business payments and expenses via linked checks or debit cards.
Business checking accounts occasionally offer interest, although the rates are often minimal. Additional capabilities might be available to you, like giving employees debit cards and integrating bookkeeping software.
Financial Account
Personal and business savings accounts function similarly, allowing you to earn interest on money that your business sets away. There are some limitations to take into account, though. For instance, access to money may only sometimes be available via ATM, debit card, or cheque. Additionally, you often have a monthly withdrawal cap of six.
The starting deposit may also be more significant than a business checking account. Nevertheless, It is a method of obtaining more excellent interest rates while maintaining an FDIC-insured account.
Account for Foreign Currency
Foreign currency accounts are the best option for businesses that receive or send money in other currencies, commonly called borderless or multi-currency accounts. They perform similarly to other deposit accounts, such as checking and savings accounts, in terms of functionality. However, a foreign currency account eliminates the requirement for separate bank accounts in the nations that use that currency, substantially streamlining your company’s financial operations.
Most accounts that deal in foreign currencies can accommodate the majority of major currencies, including U.S. dollars, euros, British pounds, and Japanese yen. It is prudent to confirm which currencies may be managed with the account to ensure it matches your company’s demands because the particular ones supported may differ per bank.
You can frequently avoid specific currency exchange fees using foreign currency accounts. Additionally, you may frequently decide when to switch money between two currencies, which makes it simpler to profit from advantageous exchange rates when they happen.
Account for Merchant Services
Customers’ credit and debit card payments can be accepted using merchant accounts, which are commercial bank accounts. It makes collecting money easier since it is placed into one of your other business bank accounts after completing the payment.
The transaction costs are typically the main disadvantage when it comes to downsides. You might also have to pay setup and application costs and penalties for early termination. The fees differ from bank to bank, so thoroughly analyze the information to determine whether the related costs seem appropriate given the service offered.