Business banking goes hand-in-hand with running a business, since the success of a small or large business depends so much on how financially profitable it is.

Day to day, business owners need to stay on top of their revenues, dividends, overhead expenses, employee benefits, taxes, and their good standing and credibility with vendors, customers and creditors, among others. With those things in mind, what’s the most basic banking product that every business owner needs as a start?

A personal checking account is one of the cornerstones of financial planning. So is a business checking account – it’s an essential tool every business needs. The self-employed contractor to the CEO of a large corporation should open up a free business checking account to meet their daily financial needs, plus, for all the benefits tailored for businesses not included in a standard personal checking product.

Business Checking Account Benefits

1. Low Restrictions

Personal checking accounts often place limits on the maximum amount of withdrawals a customer can make per week or month.

Business checking accounts have lower limitations, designed to accommodate businesses which anticipate a sizable volume of transactions and cash flow on a regular basis.

2. Tax Filing Ease and Public Visibility

Business checking accounts make financial responsibilities like tax prep much easier (the IRS forbids personal and business taxes to mix).

Additionally, it improves visibility: a business’ name and address are listed on checks payable. Businesses must also obtain their unique Employer ID number (EIN) before opening a checking account.

3. Services and Perks

Many business checking accounts may include bonuses to help businesses more easily streamline their operations, like payroll services, help seeking out a small business loan, and the option for owners to give employees access to the account.

4. Interest Rates

Dividends aren’t just for personal checking. With most business checking accounts, company owners can tap into accruing interest to help accelerate the growth of a small corporation.

Some Drawbacks of Business Checking

Proprietors of businesses large and small can make the best decision on a checking account with the most information at hand.

• Insurance limits. The Federal Deposit Insurance Corporation protects bank accounts up to $350,000 on non-interest bearing business checking accounts. For businesses with a large reserve, any revenues over that amount in a business checking account are not insured.
• Mandatory fees. Conversely, while they’re free to open, business checking accounts are often charged fees if they fall below a minimum balance. For the start-up entrepreneur, this can make small business banking difficult if monthly fees add up. Thankfully, with low restrictions on many accounts, the positives can outweigh the negatives.

How to Open a Business Checking Account

Who can open a business checking account? Anyone from LLCs, LLPs, independent contractors and nonprofits and more. If you already do business with a bank or credit union you trust, even better.

Consult with them to see what kinds of business banking options they may have to offer. Opening an account takes just a few simple steps:

• Obtaining your EIN for federal tax purposes;
• Preparing the necessary documentation, like a business license or storefront lease agreement;
• If your financial institution offers multiple business checking products, choosing one that fits your many needs; and,
• Filling out thoroughly a checking account application.

Making a checking account comparison can be easy when it’s clear what a checking account can do for you and your business. When a business is thriving and profitable, the most important step is finding a way to manage your money through one of the many business checking accounts on the market today.