Small Business

3 Quick & Easy Tips for Opening Your First Business Account

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First, a hearty congratulations to you!

If you’re reading this post, we’re willing to bet that your pet project has expanded to a thriving business. Naturally, you will need a place to store your cash.

Opening a business checking account will help you keep your finances organized and – when Tax Day rolls around - prove to the IRS that you’re running a legitimate operation.

Below, we’ve listed three tips to ensure your banking process goes as smooth as possible:

1. Understand How Business Accounts Vary

Depending on the type and size of your business, you will have different banking needs. To maximize your money – and limit the amount of fees you pay – be sure to conduct thorough research on which accounts will fit your needs.

Some areas where accounts will vary are:

Minimum Balance/Monthly Maintenance Fees

If a certain minimum balance isn’t met, banks may charge a minimum balance or monthly service fee. If you do not anticipate maintaining a moderate-sized balance ($1,500 - $5,000) at all times, keep this in mind as you shop around.

Transaction Limits

Likewise, many business accounts also limit monthly transactions. Banks typically allow up to 200 free transactions – including deposits, ATM/electronic transactions, withdrawals, and checks – then charge a nominal fee for each additional transaction.

Cash Deposit Limits

Similar to transaction limits, banks also limit cash deposits. These deposit limits can be as low as $3,000 per month. If you have a cash-heavy operation, such as a bar or restaurant, be sure to keep this in mind.

Extra Perks

Beyond your basic needs, many banks will offer additional perks that will make business management much easier.

Some perks are obvious, such as preferred rates on long-term loans, equipment financing, and foreign currency exchanges. However, some perks are not as obvious, such as preferential deals on office supplies, payroll services, travel, and employee insurance. Always ask your bank what else they can do to accommodate your business needs.

Among most banks, there are two standard checking accounts for businesses:

2. Choose the Right Bank

Consulting with your personal bank to see which business accounts they offer is a great start. But it’s equally important to expand your research and ensure you’re getting the best offer for your needs.

Doing your due diligence will save you money, time, and effort.

Beyond the basic fee schedules, consider additional areas such as:

  • Future Banking Needs: Does your bank have the capacity to accommodate your business as it grows?

    For example, working with a small, local bank can be wonderful. However, if you anticipate your business expanding beyond its current location, you will experience growing pains. 

  • Online vs. Brick-and-Mortar: If you’re particularly sensitive to banking costs, consider working with an online bank. Because branchless banks do not share the same overhead costs of traditional brick-and-mortars, they can provide greater value in the form of lower fees and greater interest earnings.

    Likewise, if you prefer more hand-holding, consider a traditional bank. Many brick-and-mortar banks will provide you with a personal banker that will help to identify financial concerns or reduce commercial debt. 

3. Get Your Paperwork in Order

Once you’re ready to open an account, it’s important to get your paperwork in order first. Doing so will save you time upfront and minimize the back-and-forth between you and your bank.

To open a business checking account, you will need the following documents:

  • Identification: Depending on the name of the business, bring a government-issued ID (driver’s license or passport) that matches the business’s registered information. 
  • Business License: The bank will require you to bring a business license in order to confirm that your business is a legitimate operation. Before applying to open a business account, make sure you first register your business in the state that you will operate in. 
  • Fictitious or DBA Name: If you are “doing business as” (DBA) a fictitious name, be sure to bring documentation. To register, you’ll need to first submit a form to the Department of Labor or Secretary of Commerce. 
  • Tax ID Number: Bring your Tax ID Number or Employer Identification Number. You can get this information from the IRS. If you are a sole proprietor without employees, you may use your Social Security Number instead. 
  • Business Address: Be prepared to present a proof of your business address, such as a utility bill. 
  • Minimum Deposit: Many banks will require a minimum deposit to open a business account. Be prepared to submit this to your prospective bank. 

Get Started Today

As long as you do your research, opening up your first business account should be an easy process. No matter the size of your business, or where you are going, the business banking products available from Axos Bank offer solutions to help get you there.

Explore your options on our Small Business Banking website.

3 Quick & Easy Tips for Opening Your First Business Account

This blog post was published by Axos Editorial Team on February 8, 2019 and last updated on February 8, 2019.

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