You may be a business owner or self-employed and are considering opening a business checking account. If you aren’t completely sure whether one is right for you, weigh the benefits of having a business checking account against any potential drawbacks:
Pros of Business Checking Accounts:
- Business finances are separated from personal accounts. This makes preparing taxes much simpler and prevents any financial issues associated with the business from becoming wrapped up in the owner’s own money.
- A business checking account can help to establish the business’s identity and build credibility with customers and creditors.
- These accounts usually come with services that are meant to help the business function more efficiently. These can include payroll services, free online banking and assistance obtaining business-related loans.
- Business owners have the option to allow employees access to the business checking account as well. This can be limited to authorizing employees to make deposits only or even issuing an ATM or debit card that lets the employee pay for expenses directly through the business checking account.
Cons of Business Checking Accounts:
- There are many fees that apply to business checking accounts and not personal checking accounts. For example, a well-established business is commonly expected to hold a somewhat high minimum balance and may be charged fees for failing to do so. An individual account holder, however, is usually not expected to keep any particular amount in their account and can have a $0 balance, so long as they do not overdraw.
- Business checking accounts are subject to the same FDIC insurance limitations as personal accounts. The current account balance limit to be insured by the FDIC is $250,000 per account holder, per financial institution. Be sure your business’s finances are protected by staying under this number.