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Entrepreneurs Hub:
Strategies, Tips & Insights to Grow Your Business

Setting up a Business Bank Account

Launch your Company

To facilitate financial transactions for your business, it’s essential to set up a business bank account. By doing so, you comply with legal requirements and enjoy various benefits for your company and employees. Furthermore, it offers protection, making it an attractive option.

Advantages of a Business Bank Account

As soon as you start receiving and spending money in your business’s name, it’s best to open a business bank account, which includes checking, savings, credit card, and merchant services accounts. A merchant account enables you to accept credit and debit card payments from your customers.

You can initiate the process of opening a business bank account once you have an Employee Identification Number (EIN).

A business bank account has several benefits that personal accounts don’t offer, such as protection, professionalism, preparation, and buying power.

  • Protection: A business bank account provides limited personal liability protection, separating your business funds from personal ones. Merchant services also offer purchase protection to customers and keep their personal information secure.
  • Professionalism: Your customers can pay you with credit cards and checks made out to your business, and your employees can perform banking tasks on your company’s behalf.
  • Preparation: Most business bank accounts offer the option of a line of credit, which can be helpful in emergencies or purchasing new equipment.
  • Buying power: Credit card accounts can help finance large startup expenses and establish your credit history.

Consider these factors to find the perfect account for your business

Many business owners make the mistake of opening a commercial account at the same bank as their personal accounts. Take the time to compare rates, fees, and features offered by different banks to find the account with the lowest fees and best benefit

When opening a business checking or savings account, consider the following factor:

  • Opening incentiv.
  • Interest rates for savings and checking.
  • Interest rates for lines of credit.
  • Transaction fee.
  • Fees for early termination.
  • Minimum account balance fee.

When opening a merchant account, pay attention to the following factor

  • Discount Rate – The percentage charged for each transaction processe
  • Transaction Fees – The amount charged for each credit card transactio
  • Address Verification Service (AVS) fee
  • Daily ACH Batch Fees – Fees charged when posting credit card transactions for the da
  • Minimum monthly commissions – A commission charged if the company fails to meet the minimum required number of transaction

Payment processing companies are a popular alternative to traditional merchant service accounts. Some offer additional features, such as accessories that allow you to accept credit card payments using your phone. Consider similar fee categories as with merchant account.

If you decide to go with a payment processor, keep in mind that you’ll still need to link it with a business checking account to receive payments. Shop around for a bank account that complements your chosen payment processor.

Ensure you have the necessary paperwork to open a business bank account

Opening a business bank account is a simple process once you have chosen your bank. You can start the process online or at a branch. These are the most commonly requested documents, although some banks may require additional paperwork.

  • Your Employee Identification Number (EIN) or Social Security number if you are the sole owner.
  • Your company’s Articles of Incorporation.
  • Ownership agreements.
  • Business license.

 

 

Tags: Launch your Company

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