Selecting a bank for your small business takes more insight and deliberation than selecting a personal banking account. Since your commercial banking needs are different from your personal banking needs, taking some time to identify the correct business account and other services is an important initial step towards business success.
Do you require a savings account? Is having an account you and a business partner can both access necessary for your business? These are the types of questions you should ask yourself in the research phase.
Factors You Need To Consider:
Location of the Bank
Make your decision according to how often you will need to visit the bank. If you need to physically visit more often, you might want something closer to you. Similarly, if you are in other cities frequently, you may want a bank with a wide geographical spread.
Smaller community banks tend to be more lenient with new business owners and have more flexible credit standards for opening accounts. This is important to know since it can be difficult to borrow from a big financial institution if your company has a bad credit score or has recently launched (has not developed business credit yet).
Manually logging transactions is a tedious and time-consuming task. Choosing a modern bank that interfaces with your current tech framework or with applications that you aim to implement in the future is your best bet.
At FINSYNC, we know first-hand that syncing bank accounts to back-office software makes business life much more manageable. Bridget Chun of Chunogly Productions says, “Having my Chase accounts connected to FINSYNC makes my life significantly easier! It is especially convenient for my accountants when they do my deductibles or while figuring out how much we spend and what we spend it on.”
Fees are typically charged by banks for a variety of services, such as low deposits, overdraft fees, inactivity penalties, wire transfers, and other service charges. These charges can add up quite fast if you don’t pay attention to them and adhere to the bank’s policies.. If you think maintaining the minimum balance, for example, would be challenging, consider switching banks.
Incentives are a great reward for your affiliation with the bank. One of the most common types of incentives is cashback. The main thing to look for is what kind of benefits come with keeping a certain balance in the account for the said amount of time. It’s all about developing and maintaining the practice of routinely holding a certain cash level in the account.
You may also pick up additional incentives on other offerings from the bank. Add a credit card and it likely has a rewards program of its own.
One important thing to keep in mind is that as your business grows, new or additional banking services may be needed. We recommend conducting a review of your accounts at least every one to two years to make sure your bank accounts still meet your business needs.