How to Open a Business Bank Account and Find the Best Deal
The website is up, the business cards are printed, the shelves are stocked, and you're almost ready for business. But before you swing open the doors, you're going to need a way to manage the cash from sales of those "Star Wars" dog sweaters. Opening a business bank account doesn't have to be a hassle, but you do need to know a few things first.
Here's how to get started
The U.S. Small Business Administration website has a detailed guide that will help as you gather the documents you'll need to open a business bank account. The requirements vary from sole proprietorships to partnerships and from corporations to limited liability companies, but it's basically the same for all: You need documentation with the name of your business and a tax identification number.
After visiting the SBA site and making sure you have the necessary documents, you're ready to head to a neighborhood bank. You could set up your account online if your business doesn't focus on telemarketing, gambling, or precious metals, and if it doesn't provide money services, such as check cashing or currency exchange. Opening your business bank account online will save precious time that you could use at your new business.
Watch out for the fees
Much like with your personal checking account, you'll want to find a business account with low fees. A few banks offer no-fee business checking accounts, but most have monthly fees, transaction fees, and cash handling fees. Use the NerdWallet Business Checking Account Tool to see a comparison of fees as you shop for banks. The first rule: To fight fees, you need to understand them.
Monthly. This is a fee like the kind you might find with a personal checking account, but the amount charged could be higher, about $15 a month. Luckily, the monthly fee usually is waived if you keep a minimum balance. However, for business accounts that minimum is higher, about $5,000, depending on the bank.
Transaction. Transaction fees range from $0.30 to $0.50 for each transaction, although banks typically offer 200 to 500 free transactions in a month before you start incurring fees. If you're going to be making a lot of deposits, withdrawals, wire transfers, or other kinds of transactions, you'll want to pay close attention, since fees can add up. But for many small businesses, 250 transactions a month will be plenty.
Cash handling. The cash handling fee comes into play if your business takes in and needs to deposit large amounts of cash. You could pay a fee as high as 0.2% on large cash deposits. Look for an account that has a high monthly maximum for cash deposits before fees kick in. Some banks set the maximum at $5,000, while others let customers deposit up to $20,000 a month before charging fees.
When it comes to financial products, it's important to remember that you're the customer and banks want your business. Your bank or credit union should understand and, as much as possible, cater to your needs. If you want to learn more about a bank you're considering, check out our CEO Series, where we talk with the CEOs of banks and credit unions -- large and small -- to get their take on the small business banking landscape and what they offer.
Your credit card may soon be completely worthless
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.
The article How to Open a Business Bank Account and Find the Best Deal originally appeared on Fool.com.Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.