If you are starting a new business or if you have a small business already but are not happy with your checking account, a new business checking account may be in order. It goes without saying that you face a wide range of choices in banks and types of checking accounts.
Here is a suggested checklist to use as you evaluate new banks if you are planning on opening a new business checking account online:
1. Is it free?
Many banks offer free business checking. But be sure to check the fine print, since the total amount you pay each month is not only composed of the monthly fee, but also any additional fees you pay for using the account.
2. What kind of fees does the account charge?
The kinds of additional fees you might pay will vary by bank and account type. Examples include: paying a fee per transaction (beyond a certain number of transactions processed), paying fees if your balance falls below a certain minimum, and paying fees related to viewing scanned copies of your outgoing checks online.
3. What is the APY for the account?
APY stands for annual percentage yield (APY). As the name implies, it refers to the amount you stand to earn in interest for a given deposit amount over the course of a year. note: the APY calculation takes interest compounding into account. Obviously, the higher the APY, the better.
4. Can you open an account online?
Some accounts allow you to apply online. Check with the bank you are applying to and find out if they allow this option.
5. Do they offer a cash incentive?
Some business banks will offer you a cash incentive of, say $50 or $100 to open a business checking account. Everyone can use a little bit of extra cash, if you can find a bank that offers this for new account holders.
6. Is it FDIC insured?
Of course, you will want your bank to be FDIC-insured. This means that a government body will cover the amount of your deposit if the bank goes out of business. Certain maximum coverage limits apply.
7. What other services do they offer?
One of the benefits of finding a good business bank is the additional services they offer. Many banks that specialize in business accounts offer payroll services, merchant credit card processing, lock boxes and of course business loan help.
8. Do they offer custom checks?
This may or may not be at the top of your bank wish list, but many small businesses like the ability to offer custom checks. This can tie into the branding look-and-feel of your business.
9. Do they charge overdraft fees?
Most banks still make a hefty part of their fee-related income from charging overdraft fees. In fact, most overdraft protection programs are opt-in, meaning that you are automatically enrolled in the program just for signing up for the account. Fortunately, some banks now offer overdraft protection programs that will never charge you an overdraft fee - even if you overdraw your account.
When looking for a business bank account, decide which of the items on this checklist are important to you. Then, go shopping for your new account. Consider creating a spreadsheet in Excel or on a piece of paper to keep track of which checking accounts do and do not fulfill your needs. May the best account win!
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