Some small business owners start off using their personal checking accounts for their businesses.
They then transition to a business checking account that’s used exclusively for business. This may happen once their business earns money.
A business checking account is an excellent way to keep your personal finances separate from your business finances.
This way, it becomes easier to manage your business income and expenses for tax purposes.
There are plenty of business checking account options. So, you may have difficulty narrowing down the right one based on your needs.
Before opening a business checking account, here are a few factors you should think about.
Compare Business Checking Accounts
Monthly Fees for Business Checking Accounts at Top 10 U.S. Banks
|Bank||Account||Monthly Fee||How to Waive Fee|
|Wells Fargo||Simple Business Checking||$10||
|Suntrust||Simple Business Checking||$5*||
*Fee is automatically waived for first 12 statement cycles.
|TD Bank||TD Business Simple Checking||$10||Product is only eligible for a non-profit waiver of the monthly fee.|
|Bank of America||Business Fundamentals Checking||$18||
|Chase||Chase Total Business Checking||$15 (or $12 if you enroll in paperless statements)||
|Santander||Basic Business Checking||$7.50||
|BB&T||Business Value 200 Checking||$12*||
*Fee is automatically waived for first 65 days.
|Fifth Third Bank||Business Standard Checking Account||$11||
|PNC Bank||Business Checking||$12*||
*Fee is automatically waived for first 3 months of account opening.
|Citizen's Bank||Clearly Better Business Checking||$0||N/A|
What Are the Bank’s Balance Requirements?
It’s important to compare features, terms, and fees of a basic business checking account.
Bank fees are known to rise. However, comparison shopping is one of the best ways to cut how much you spend each month on bank fees.
Many banks charge customers for the privilege of having a checking account. Business checking accounts are no exception.
Monthly maintenance fees vary widely by bank. But these fees can range anywhere from $8 to $12 a month. Sometimes more, sometimes less.
The good news is that you can often avoid monthly service fees. To do so, you must keep a certain amount in your business checking account.
Some banks will waive these fees if you maintain a minimum balance, a minimum daily balance, a minimum combined balance, or a minimum monthly average balance.
Here’s how these different balance requirements work:
1. Minimum balance
Some banks require a minimum balance to waive the monthly service fee.
If so, your business checking account balance cannot drop below this minimum at any time during the month or your statement cycle.
So let’s say you open a basic business checking account with a minimum balance requirement of $1,500. In this case, you must keep a minimum of $1,500 in your account at all times.
If you go below this amount—even by a dollar or a few cents—the bank will charge the monthly service fee for a particular statement cycle.
2. Minimum daily balance
On the other hand, a bank may only waive this fee if you’re able to maintain a minimum daily balance.
Your account can drop below this minimum throughout the statement cycle. But you “must” have the minimum balance amount in your account by the end of each day.
Let’s say there’s a $1,500 minimum daily balance and your account drops to $1,100 on a certain day. You must deposit $400 into your business checking account before the end of that business day.
This is the only way to maintain the minimum daily balance requirement and avoid the monthly service fee.
3. Minimum combined balance
Do you have multiple accounts with a particular bank?
Some financial institutions will also waive the monthly service fee if your combined balances meet a certain minimum.
Minimum combined balances can apply to business checking accounts, savings accounts, lines of credits, or other types of accounts.
The bank calculates the total of all your accounts in the statement cycle. This determines whether you’ll pay the monthly service fee.
4. Average monthly balance
Then again, some banks use your average monthly balance to determine whether you’re charged a service fee.
The bank calculates your balance at the end of each business day. And then divides this number by the number of days in the statement cycle. You’re not charged a service fee if your average daily balance meets or exceeds the bank’s minimum requirement.
Minimum balance requirements vary by bank. So make sure you shop around and compare these minimums.
Your ability to keep a bank’s minimum in your checking account is based on the amount of income your business generates. It’s also based on how often you’ll deposit these funds into your business checking account.
Consider the size of your business, too. Smaller businesses tend to have fewer clients or customers. This can affect the amount of cash flow in your account on any given day of the month.
How Many Free Monthly Transactions?
Another factor to take into account is the number of transactions you’ll likely make on a monthly basis. Some business checking accounts charge customers a per transaction fee.
The good news is that some bank accounts allow up to a certain number of free transactions per month. Meanwhile, others charge a flat fee for a specific number of transactions. And then a per transaction fee for those in excess of the free amount.
The per transaction fee isn’t expensive, often ranging from $0.15-$0.50 per item that exceeds the free amount. But depending on how many transactions you conduct throughout the month, these fees can add up.
Review your current transaction history to get an idea of how many transactions you’ll make monthly (on average) moving forward.
You may learn from your three-month history that you make about 20 transactions per month? If so, you need a business checking account that doesn’t charge a transaction fee up to the first 20 or 25 items per month.
Then again, maybe your business averages 500 transactions per month. On that account, you need a business checking account that allows up to 500 free transactions.
Whatever your transaction average, find an account that allows the most transactions at the cheapest cost.
How Many Free Monthly Cash Deposits?
Whereas your personal checking account may allow you to deposit as much cash as you like, some business checking accounts charge a cash deposit processing fee, too.
Many small businesses receive a lot of cash payments. These business owners or managers also make regular bank deposits. So naturally, these companies need to deposit the most cash and pay the least amount of fees.
Fortunately, many basic business checking accounts will allow you to deposit a substantial amount of cash before any fees kick in.
Even so, the amount of cash you’re able to deposit fee-free varies, hence the importance of shopping around and comparing accounts.
Again, check your recent transaction history to determine (on average) the amount of your cash deposits on a monthly basis.
If you’re only depositing $10,000 in cash each month, you’ll probably be okay with a business checking account that allows up to $10,000 of cash deposits with no fee.
Then again, you may need a business checking that allows free cash deposits up to $20,000.
Keep in mind that if you exceed your number of free cash deposits, the bank may charge between $0.25 and $2. The fee is per $1,000 of cash deposits that exceed your number of free deposits.
Business Savings Cash Deposit and Transaction Fees at Top 10 U.S. Banks
|Bank||Account||Cash Deposit Processing Fees||Transaction Fees|
|Wells Fargo||Business Market Rate Savings||No fee for first $5,000, then $0.30 per $100 deposited||No fee for first 20 transactions, then $0.50 per item|
|Capital One||Spark Business Savings||No fee for first $2,000, then $2.00 per $1,000 deposited||None|
|Live Oak Bank||Live Oak Business Savings||N/A||No fee for first 6 transactions, then $10 per item|
|Bank of America||Business Advantage Savings||No fee for first $5,000, then $0.30 per $100 deposited||No fee for first 25 transactions, then $0.45 per item|
|Chase||Chase Business Total Savings*||No fee for first $5,000, then $2.50 per $1,000 deposited
*For all Chase business accounts, fee is only charged if you need a night drop, post verification, or immediate verification.
|No fee for first 15 transactions, then $0.40 per item|
|Santander||Basic Business Money Market Savings||$0.22 per $100 deposited for Express Cash Pack, or $0.15 per $100 (for deposits $500 or less), or $0.27 per $100 deposited (for deposits $500 or greater), for Non Express Cash Pack||None|
|BB&T||Business Money Rate Savings||No fee for first $5,000, then $2.50 per $1,000 deposited||No fee for first 20 transactions, then $0.39 per item|
|Fifth Third Bank||Business Relationship Savings||For deposits $25,000 or less, $0.026 per $1 deposited
For deposits between $25,000 and $100,000, $0.032 per $1 deposited
For deposits $100,000 or greater, $0.037 per $1 deposited
|No fee for first 100 transactions, then $0.515 per item|
|M&T Bank||Commercial Savings||No fee for first $5,000, then $0.25 per $100 deposited||No fee for first 10 transactions, then $1.00 per item|
|Citizen's Bank||Business Savings||No fee for first $5,000, then $0.75 per $1,000 deposited||No fee for first 200 transactions, then $0.50 per item|
What Is the Bank’s Wire Transfer Fee?
Depending on the nature of your business, you may also need wire transfers.
This is a method that allows you to send or receive electronic funds to another person or company. But while wire transfers are quick, they can also be expensive.
Fees for a wire transfer vary, but many of the top U.S. banks charge roughly the same for this service. But it’s important to compare fees for incoming and outgoing transfers. This is especially important if you’ll receive or send international transfers.
You might pay around $15 for a domestic incoming transfer. Or, $30 for an outgoing domestic transfer.
Business Checking Wire Transfer Fees at Top U.S. Banks
|Wells Fargo||Incoming: $15
| Incoming: $16
|TD Bank||Incoming: $15
|Bank of America||Fees vary based on account type||Fees vary based on account type|
Outgoing: $35 if a banker helps you
$25 if done online
Outgoing: $50 if a banker helps you
$40 if done online
|Santander||Domestic Incoming: $15
Domestic Outgoing: $27
|Fifth Third Bank||Incoming: $15
If your small business sends or receives a lot of wire transfers, look for banks that charge the least amount for this service.
As you shop around, inquire as to whether a bank offers a limited number of free transfers each month.
Or maybe the bank will waive the wire transfer fee if you meet other conditions.
For example, some banks might include free wire transfers with a premier business checking account.
Does It Allow Easy Employee Access?
A business checking account also comes in handy if you have employees. Many accounts allow for many check signers.
This is useful if one of your employees handles accounting for the company and they need check writing privileges.
You can also give certain employees authorization to use the business debit card to make purchases for the company.
Some banks will provide additional debit or ATM cards at no additional charge. Or, charge a small fee.
Opening an account is an excellent way to organize your business finances. This can help you keep an accurate record of income and expenses for taxes.
And with other check signers on your checking account, you can delegate some of the accounting responsibilities to an employee. This frees up your time so that you don’t become overwhelmed by your workload.
Keep in mind that business checking accounts are not created equal.
So it’s important that you know your options. Compare features and terms offered by different banks.
This is the best way to save money on monthly service fees, transaction fees, cash deposit fees, and even wire transfer fees.