Review: The 5 Best Small-Business Bank Accounts

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Financial experts recommend keeping your personal finances separate from those of your business. Ideally, you should start searching for the best small-business bank account as soon as your company is up and running. Most banks provide this service, but some will offer better deals than others. The old saying, "A penny saved is a penny earned" fits perfectly in this context, so take the time to research your small business banking options.

Benefits of Business Bank Accounts

Many entrepreneurs use their own savings for startup capital. That's perfectly fine as long as you create a clear boundary between your personal accounts and business accounts. Failure to do so may lead to accounting errors and cause unnecessary problems at tax time. Keeping your business finances separate from your personal funds helps you maintain a professional image while providing a clear audit trail for the IRS.

While it's true that sole proprietorships don't require a business account, having one can save you time and make bookkeeping easier. With a business bank account, you'll manage your income, expenses and taxes more efficiently. After all, you don't want to end up digging through a pile of receipts to figure out which purchases were for business.

A business checking account may also come in handy if you want to build business credit and apply for a loan. This way, you won't have to rely on your personal credit report only. Furthermore, business banking typically comes with a line of credit that your company may use in case of emergency or for equipment purchases. They may even offer you a business credit card. If you mix business and personal finances, you could open yourself up to more legal exposure by losing the personal liability protection you have as an individual.

Another advantage of having a business account is that you can allow your accountants, employees or business partners to handle your transactions. For example, they may handle small but time-consuming tasks on your behalf, including payroll, bookkeeping, bill paying and more. On top of that, you will be able to accept debit card payments or credit card payments from your clients.

Types of Bank Accounts

Just like a personal bank account, business accounts come in all shapes and sizes. At the very least, you should consider opening a checking account and a savings account. Other options for business customers include retirement accounts, money market accounts and certificates of deposit. Once you've found the best small-business bank account, you may keep your funds in a checking account and use the right tools for saving and spending.

Use a business checking account for ongoing transactions. In general, banks put fewer limitations on checking accounts since they expect customers to make transactions on a constant basis. Most of them offer perks like online banking, mobile apps, debit cards and money-transfer services. Some also provide access to virtual stock market platforms, simulations of investment activities, trading tools and other value-added functionalities.

If you're planning to put some money aside, consider opening a business savings account. This way, you will earn interest on your funds and have cash for rainy days. Additionally, savings accounts are insured by the Federal Deposit Insurance Corporation with a limit of $250,000 per depositor per bank per ownership category. If, say, your bank goes bankrupt, you will recover the funds in your business savings account (up to the insurance limit) within days thanks to the FDIC.

A third option is a money market account, which combines the features of checking and savings accounts but earns more interest. This type of account appeals to those who tend to carry large balances in their checking accounts, and it requires a minimum balance of $5,000 and up. Business owners who opt for certificates of deposit must keep their funds in that account for six months to five years in order to earn interest. This option is suitable if you have savings that you don't plan to use anytime soon.

Be Aware of Hidden Fees

Each type of business bank account has advantages and drawbacks. Additionally, banking fees vary significantly from one institution to another.

Checking accounts, for example, are subject to dozens of fees, which can add up. There are monthly maintenance fees, overdraft fees, account opening fees, account statement fees, interbank transfer fees and more. Expect to pay a lot more if you work with international customers, vendors and suppliers.

When searching for the best small-business bank account, choose one with zero opening and maintenance fees. Ask about transaction fees and monthly service fees — sometimes you have to keep an average daily balance to maintain features like free checking or free ATMs. Some banks also allow for a limited number of free transactions. Others eliminate most fees for customers who make transactions or request account statements online.

Speaking of online banking, look for a business account that you can easily access and manage from your smartphone, computer, tablet and other mobile devices. Also, make sure you choose a bank that is insured by the FDIC.

Best Small-Business Bank Account

Remember nothing is free — including no free accounts. That's why you need to research your options and compare the fee structures, balance requirements and online banking features available at different banks. Consider how often you use technology for your banking needs and then look for a bank that has the tools and resources to support those needs.

Take the following aspects into consideration as well:

  • Types of services (debit and credit cards, online business banking, checks, savings accounts, bill pay, etc.)

  • Monthly required use of debit or credit cards

  • Transaction/deposit/wiring allowances

  • Minimum account balance fees

  • ATM fees and wire transfer fees

  • Account closing fees

  • E-statements

  • Money management tools

  • Financial performance management tools

  • Interest rates for lines of credit and savings/checking accounts

  • Dedicated option for card blocking

  • Extra services (payroll processing, e-bills, tax calculators, invoicing tools, trading tools, account personalization)

  • Customer service and support (24/7 help desk, proactive online chat, online ticketing systems, roboadvisory)

  • Bonuses and discounts (reduced insurance rates, hotel discounts, introductory offers)

  • Complementary business credit lines (if any)

  • Ease of integration with existing software programs, such as accounting and invoicing software

  • Account security

  • The bank’s reputation

No business bank account will tick all the right boxes, but failing to do your research may result in hefty account fees. Assess your banking needs, see what's available on the market and compare multiple options from different providers. In the meantime, check out the five best banks for small businesses looking for the best checking accounts and beyond.

Chase Total Business Checking

The Chase Total Business Checking account is designed for small companies focused on growth. The monthly maintenance fee is $15, but you can waive it by keeping at least $1,500 in your bank account on a daily basis or by registering for a personal checking account. Customers who opt for paperless statements pay only $12 per month. Other perks include:

  • 100 free transactions each month

  • Up to $5,000 in free cash deposits per month

  • Access to 16,000 ATMs

  • Free Chase debit card

  • Unlimited electronic deposits

  • Multiple ways to send and receive money, including mobile banking, wire transfers and more

  • Access up to seven years of bank statements online or on your smartphone

  • Delegate cash management to a third party

  • 24/7 customer service

  • Bonuses for new customers

  • Account alerts

Chase Bank has an extensive network of ATMs, so finding one near you shouldn't be difficult. However, not all of its products and services are offered at all locations. Additionally, overdraft protection must be requested by customers in exchange for a fee. Other fees may apply for money orders, cashier's checks, renewals of stop payments and other services.

Also, be aware that you'll only get 100 free transactions each month. Therefore, if you operate an online store or another business with extensive activity, you may end up paying a lot in fees.

Capital One Spark Business Basic Checking

A better option for companies with a large number of transactions is Capital One. The bank offers two types of checking accounts — Spark Business Basic Checking and Spark Business Unlimited Checking — with unlimited business transactions. Both business accounts include online and mobile banking, online bill payments and mobile deposits.

Spark Business Basic Checking has a $15 monthly maintenance fee, which can be waived if you maintain at least $2,000 in your account over a 30-to-90-day period. Customers can make cash deposits of up to $5,000 each month at no extra charge. After that, Capital One charges $1 for every $1,000 deposited in cash. What makes this business checking account stand out is the ability to make unlimited transactions for free.

Both accounts are designed for companies with annual sales revenue below $10 million. Spark Business Unlimited Checking carries higher fees, though. Although there are no fees for cash deposits, customers pay a $35 monthly maintenance fee that can be waived if the account balance averages $25,000 over a 30-to-90-day period. Therefore, Spark Business Basic Checking is a more affordable choice for startups and small companies.

However, sending and receiving payments by wire transfer with Spark Business Basic Checking isn't cheap. Expect to pay $40 per outgoing wire and $15 per incoming wire if it’s in a foreign currency and $25 per outgoing wire and $15 per incoming wire for domestic payments. On the positive side, account holders have access to free business debit cards, free online and mobile banking and over 39,000 ATMs across the United States.

Axos Bank Basic Business Checking

Axos Bank offers digital services only, but its deposit accounts are insured by the FDIC. U.S. business customers with a satisfactory banking and credit history can open checking accounts online directly from their computers. There are no minimum balance requirements or maintenance fees. Additionally, Axos will reimburse any fees charged when you withdraw cash from domestic ATMs.

The minimum deposit required to open a business checking account is $1,000. Once your account is set up, you can pay your bills, manage your funds and make payments online 24/7. The Basic Business Checking account does not accrue interest, but you may sign up for a Business Interest Checking account to grow your funds.

Since Axos is a digital bank, it has fewer offices across the country compared to a traditional bank. Unless you live near one of its locations, the only way to contact customer service is over the phone. Another potential drawback is that its banking services are not available to businesses in the cryptocurrency, gambling, online dating and title/payday lending industries, just to name a few.

Wells Fargo Simple Business Checking

Home-based businesses, nonprofits and small companies with low account balances and limited banking activity may want to choose a basic checking account to avoid unnecessary fees. A good option is Simple Business Checking by Wells Fargo. It does charge a $10 service fee, but you don't have to pay it if you maintain an average balance of $500 in your account each month. The minimum opening deposit is only $25.

Simple Business Checking appeals to sole proprietors, startups and other small businesses with low-volume transactions. The first 50 transactions are free of charge. If you exceed this limit, you will pay 50 cents for each additional transaction. Also, there are no fees for cash deposits of up to $3,000 per month, but you will have to pay 30 cents for every additional $100 processed per fee period.

Cash withdrawals at Wells Fargo ATMs, online bank statements and online bill payments are free. Customers also have access to text and mobile banking services, which comes in handy for those who travel frequently. Other perks include reimbursements for unauthorized transactions, special offers and discounts, debit card personalization services, account alerts and more.

Bank of America Business Checking

Bank of America offers two types of small-business checking accounts that are similar to those provided by Chase. Business Fundamentals Checking appeals to companies with average monthly balances of $5,000 or less and business debit or credit card purchases of at least $250 per month. If you meet these terms, you may waive the $17 monthly maintenance fee. Opening a second business checking account will cost an additional $12 per month.

Business Advantage Checking is slightly more expensive but has fewer fees. Customers who choose this option don't have to pay extra for opening a second business checking account or for managing their primary account. Business Fundamentals Checking has a $15 monthly fee for account management. Other key features include:

  • Free business investment account (with Business Fundamentals Checking)

  • Free business savings account (with Business Advantage Checking)

  • QuickBooks integration

  • Various options available to those looking to avoid the monthly maintenance fee

  • No fee for the first 200 transactions per statement cycle, then 45 cents per operation (with Business Fundamentals Checking)

  • No fee for the first 500 transactions per statement cycle, then 45 cents per operation (with Business Advantage Checking)

  • No fee for cash deposits of up to $7,500 per statement cycle, then 30 cents per $100 (with Business Fundamentals Checking)

  • No fee for cash deposits of up to $20,000 per statement cycle, then 30 cents per $100 (with Business Advantage Checking)

  • No fee for deposit tickets

  • No fees for check or bank statement copies, stop payments, online account management, introductory check packages, debit card replacement and other services (with Business Advantage Checking)

These are just a few of the many options available to small-business owners. Assess your banking needs, decide on a type of business bank account and look for promotional offers. Check the fine print and the fee structure and contact a customer service rep to find out more. Don't hesitate to ask about additional banking services that you may need in the future, such as credit cards, savings accounts or small-business loans.