Tips for managing your small business checking account
Monday, 19 October 2020
Your business checking account will likely be the focal point of your company's daily financial activity.
Choosing the right account and managing it carefully can help you maximize benefits, minimize fees and better control your business finances.
With this in mind, here are some valuable tips for selecting, opening and managing your small business checking account.
How to determine the right small business checking account for your business
Small business checking accounts come in all shapes and sizes. Choosing an account that best meets your business' financial needs will save you money and, ideally, simplify your financial bookkeeping. Here's what to consider when comparing accounts:
- Monthly transaction and cash processing limits. Most accounts have monthly transaction and cash processing limits. If you exceed these limits, you could be charged for each transaction or incur over-limit fees. It's important to select an account that aligns with your monthly processing needs.
- Minimum balance requirements. How much will you keep in your account on a regular basis? This is important because if your balance drops below the minimum requirement, you could be charged a fee.
- Debit card and ATM usage. Do you need debit cards for multiple employees? Or do you and your employees frequently use ATMs? If so, choosing an account that includes free debit cards and generous ATM usage could save you a bundle.
- Check writing. Will you write a lot of checks each month? If so, look for an account that offers discounts on checks and also sufficient transaction allowances.
Do your homework up front so you can select the right account. Otherwise you could find yourself spending a lot of money just to manage your business finances.
What you need to open a small business checking account
Most businesses will need an Employer Identification Number (EIN), which is also called a business tax ID, to open a business checking account. The IRS uses this number to tax your business. You can apply for an EIN online, by fax or in person.
In addition to your EIN, you will need the legal name, physical address and telephone number for your business. You might also need your business license, organization document type and other paperwork. In most cases, banks will list the documents you need on their websites.
Having the required documents and correct information when you go to the bank to open your account will not only make the process easier, it'll help ensure you can actually open the account during the appointment.
It's also smart to assign check-writing privileges when opening the account. You can specify who can sign checks, as well as who needs to sign checks in certain situations. For example, you might require two signatures if a check exceeds a certain dollar amount.
Ways to best manage your small business checking account
Mismanaging your account by not maintaining minimum balance requirements or exceeding transaction limits can be costly. However, most business checking accounts include online and mobile banking for 24/7 account management, which can help you avoid fees and stay on top of your business finances. These tools allow you to:
- View balances and transactions. The ability to check your account anytime and from just about anywhere is important.
- Set up customized alerts. You can be alerted when your balance dips below a certain amount, deposits or withdrawals post and much more.
- Monitor employee spending. You can view activity on employee debit cards and place controls on individual cards.
- Track expenses and monitor budgets. Comprehensive expense tracking and budgeting tools make it easy to keep up with your finances in real time, and also collect and analyze valuable financial data.
As a business owner, you have many hats to wear and responsibilities to juggle. By taking the time to select and open the right business checking account and then carefully managing your account with easy-to-use digital tools, you can be confident your finances are under control and concentrate on your core business activities.
The content provided is for informational purposes only. Neither BBVA USA, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial consultant about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates.
Links to third party sites are provided for your convenience and do not constitute an endorsement. BBVA USA does not provide, is not responsible for, and does not guarantee the products, services or overall content available at third party sites. These sites may not have the same privacy, security or accessibility standards. Consult your legal counsel for advice concerning your specific business activities.
You may also be interested in:
Managing your business while sheltering in place
Managing your small business from home during the pandemic crisis can be stressful. Here are several steps to help keep you on track.
Marketing tips for seasonal businesses
Entrepreneurs offer tips, ideas, and marketing strategies for seasonal businesses to keep cash flowing and customers engaged during the off season.
How to finance your small business comeback
The federal government's response to the coronavirus pandemic includes billions of dollars aimed at supporting small businesses and helping them to manage through shutdowns and rebuild their businesses.