Whether you are a small or a big business, opening a business account is one of the most crucial steps of running a successful business. A business account is an account that you will use for all of your business financial needs. Although yes business accounts are important for every business to survive, not all business accounts are the same, and finding the right business account can be daunting; in this article, we will cover all that you need to know about the business account opening process and how you can choose the right one for your business needs.
What is a business account?
As mentioned earlier, a business account is the financial home base for your business. This is the primary account where you hold all of the funds for everything related to your business operations. The following are the business operations for which you will require a business account:
- Paying vendors and suppliers,
- Paying employees salary
- Marketing and advertising expenses
- Receiving sales revenue
- Receiving funds from investors
- Paying taxes
- Ordering office supplies
- Ordering inventory
- Applying for business loans and grants
Types of business accounts:
There are three main types of business accounts:
- Business savings account: Having and maintaining a separate business account can be quite beneficial to businesses. You can build an emergency fund, set aside funds for your future business goals, and earn interest on your deposits.
- Business current accounts: A business current account is the account from where you will conduct all of the essential tasks of business operations. You will use your current business account for all the operations we have mentioned above. Most business current account providers also offer business saving accounts so that you have the opportunity to save money for your business as well.
- Cash management account (CMA): A cash management account is a combination of a savings, current, and investment account. If you are looking for a more strategic and comprehensive way to manage your cash and want a higher interest rate on your business savings, a CMA is a good option.
How to decide which business accounts suit your business?
Businesses now have many business account options available at their disposal, from traditional bank offerings to financial institutions that cater to businesses of all sizes. Here are a few key pointers that you need to keep in mind when settling upon a bank account provider.
How will you decide which business account is right for you?
You start by working out which ones will fit the needs of your business. Here are a few key factors to consider when you are deciding on which business account fits your needs:
- Account features and services:
Every feature and service offered by different financial institutions is unique and different, but most of them offer the following services:
- Bill Payment
- Online and mobile banking
- Wire transfer
- Debit card
- Cheque
It is not compulsory that you get all of your services from one financial institution; instead, look for one that provides you with the maximum number of services that complement your business model.
- Service fees:
For this, you need to do your research, compare the service fees that different financial institutions offer, and see which one fits your budget. The following are some of the services you will be charged for Minimum balance fees, wire transfer fees, maintenance fees, ATM fees, and overdraft fees
- Interest rates:
For this, too, you will have to do your research and compare the interest rates on the account that you are considering. Having a competitive interest rate will definitely help your business grow, but you also need to consider the pros and cons of each financial institution’s offering.
- Transaction limit
A few business account providers impose a limit on the number of transactions a business can make in a given period (daily, weekly, or monthly). This may also include caps on the number of withdrawals, deposits, bill payments, or transfers between the accounts and transfer amount. If your business often processes a high number of transactions, you will need a provider that offers unlimited transactions.
- ATM Access:
It is always advisable to check the size of the ATM network and inquire about possible out-of-network ATM fees.
In conclusion, Choosing the right business account is essential for managing your company’s finances efficiently, ensuring smooth operations, supporting growth, and aligning with your business needs for long-term financial success.
