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For some people, choosing a checking account for their personal needs can be as simple as going to the nearest branch and signing up. But when it comes to choosing a bank for your business checking account, the search can and should take some thoughtful research and consideration. Even if all you’re looking to do (for now) is deposit/withdraw money, don’t just choose the nearest bank. I’ve seen too many contractors settle for the first bank they come across, only to realize a) the bank’s fees are too high, and/or b) the bank doesn’t offer solutions for their long-term needs. That means they’ve wasted time establishing a history with the bank and are left in the same predicament in which they started.
To help you avoid that situation and find a bank that will be a great long-term partner, here are a few considerations to keep in mind and a look at four banks that offer free business checking accounts:
Why Do You Need a Checking Account?
Before you even start researching banks, you should first consider why your business needs a checking account now. Do you just need a place to manage money transactions? Are you looking for more specialized investment advice? Maybe it’s time to expand your business and you’re looking for an institution that also offers equipment leasing programs or small business loans. No matter your needs, many independent contractors find it’s easier to work with one bank that can accommodate all their needs as opposed to parceling out their business to several different banks. So as you dive into your search for the right bank, keep your list of needs nearby and ensure the bank can help you with all of them.
Don’t limit your horizons to just your current business needs, either. Start planning for the years ahead so you can pinpoint a bank that can grow with you. The time you spend researching now will pay off when you’re able to use the same bank for years to come.
Consider the Costs
As a business owner, every dollar counts. The last thing you need is a bank charging you every month just for having an account with them. Unfortunately, that’s what some of the more money-hungry banks are gravitating toward these days. If you’re not careful, monthly checking account fees can range from $10 to upwards of $50 per month (that’s between $120 – $600 per year).
However, by doing your research ahead of time and being diligent about your banking practices, there are steps you can take to avoid banking fees. For example, some banks offer free business checking accounts as long as you don’t go over a certain number of transactions per month (ranging from 150 transactions to more than 500). Other banks will waive monthly fees if you maintain a minimum balance at all times. To determine if you can meet the minimum requirements, start taking stock of your business’ regular transactions and cash flow now to tally your monthly averages. The last thing you want is to sign up for an account only to find a few months later you’ve been charged monthly fees all along as you haven’t met the minimums.
Side note: Once you’ve chosen your bank and have your checking account in place, be sure to keep track of your transactions and monthly statements. Some banks have been known to tack on fees that may not apply to you, so it’s important to correct any errors as soon as possible.
Regional vs. National Banks
This is a choice that all comes down to your personal preference in dealing with banks. If face-to-face interactions and developing a relationship with your banker(s) is what you’re looking for, a local, community bank may be the way to go. Local institutions may offer more free or lower cost checking accounts and will probably be more willing to work with you in the case of overdrafts or other issues that can arise with your business. However, these small banks may not offer all of the perks of larger institutions. Case-in-point: technology. Many local banks don’t have the resources to develop online banking features or mobile banking apps.
On the other hand, larger banks may have more additional services to offer you as your business grows, and they may be better equipped to loan you money should you ever have the need. Figure out which benefits are most important to you.
Documents You’ll Need to Open a Checking Account
Once you’re ready to open your business checking account, you’ll need to make sure you’ve got a few documents in order first. Banks need to ensure not only you are who you say you are, but that your business is set up properly. Documents you’ll need include:
• Personal identification
• Tax identification number (EIN)
• Doing Business As (DBA) registration (if applicable)
• Articles of Incorporation (if you are an LLC, corporation, etc.)
• Optional: Cash flow estimates (The more specific information you’re able to supply to your bank initially, the better advice they’ll be able to give you.)
For a complete list of application documents needed, contact your bank directly.
Four Of The Best Banks For Free Small Business Checking
Here are just a few of the banks that offer free business checking accounts (I have personal experience with U.S. Bank and found them to be quite impressive):
U.S. Bank Silver Business Package*
• 150 free transactions
• Online & mobile banking and bill pay
• Free first year of overdraft protection
Chase Total Business Checking*
• $10 monthly fee waived if you maintain a daily balance of at least $1,500
• 200 free transactions
• 24/7 access to chase.com and telephone banking
First Citizens Bank Basic Business Checking* (branch locations are not in every state)
• No minimum balance
• No monthly maintenance fee (must be enrolled in e-statements)
• Up to 175 free transactions
BECU Basic Checking*
• No monthly fee
• 50 free transactions
• Online & mobile banking and bill pay
Yes, that last one is a credit union. Some people won’t even consider this option for some reason, but it’s foolish to not even explore it as a possibility. Credit union business checking can often times come with outstanding service and benefits (and their rates for loans are often lower than traditional banks, too).
*Please note these lists are not comprehensive. Visit each bank’s website for more information.
My name is Jeff and I created this blog in 2007 to help and inspire contractors and home service providers. It’s come a long way since then.
Good solid information, especially the list of Documents You’ll Need to Open a Checking Account.
Contractors who read this and gather their documents before visiting the bank will save a lot of time.
Warm Regards,
Randal
Thanks, Randal! Yes, being organized and prepared with documents and every other aspect of your business will make everything go so much smoother and faster. Less time spent on finding paperwork equals more available time for actually working and making money.