Business banking is essential for every company regardless of size. It is essential to maintain separate accounts for personal and business transactions in order to deduct allowable expenses on tax returns. Combining accounts can be harmful and potentially cause business owners to lose out on certain tax deductions.
A variety of business banking options exists. Companies can select from basic business checking accounts to online banking. Most banks offer options to tie-in accounts to accounting software such as QuickBooks or engage in direct deposit payroll.
Connecting company bank accounts to accounting programs is a smart way to save time and reduce risk of transaction errors. Additionally, this option makes it easy for business owners to conduct required accounting procedures whether they are in the office, at home, or on the road.
Business bank accounts generally cost more to operate than personal checking accounts. Typical costs usually include: monthly service fees, transaction fees, wire transfer fees, and overdraft fees. It's never a good idea to overdraft business accounts.
A preventative measure is to setup overdraft protection by tying in a business credit card. If purchases exceed account balances, the credit card will be processed to avoid costly overdraft fees.
When selecting banks for business it is helpful to compare fees and available services. Local banks can be a good choice for companies that require working capital, but don't possess excellent credit. Local banks tend to be more lenient and willing to work with locally-based companies than major banks.
With that being said, major banks often provide more services than local banks. Major banking institutions offer small business financing, startup or working capital, credit cards, invoicing systems, direct deposit, and payroll services.
It's wise to take time comparison shopping banks because having to switch providers at a later time is a major hassle. It's helpful to consider short- and long-term goals to determine what types of banking products and services will be required.
If there is need to obtain business loans, local banks tend to be a better option because owners can establish a solid working relationship with bankers. This is not to say that major banks aren't willing to work with local businesses. They are, but they usually require owners to have adequate credit scores before approving startup or expansion loans.
While it can be time-consuming to compare financial institutions, the task is worth the effort. Major banks often charge excessive fees for daily transactions and service fees. Some assess fees if balances drop below a certain threshold. Others charge fees if the number of transactions exceed monthly allowances. These fees can quickly add up to hundreds of dollars over the course of a year.
Not only will research help business owners find the least expensive business banking account, it can also help them decide which bank would be the best partner. One consideration of using local banks is they oftentimes engage in community events to promote local companies. This can be a huge boost to business, so it's always good to ask bankers what types of promotional events they engage in each year.
Operating a successful business entails keeping a close eye of finances and sticking to projected budgets. Working with banks that provide a wide mix of accounting tools and online services lets business owners turn their attention to running the business instead of dealing with financial concerns.
We encourage you to browse our business banking article library to locate additional tools and resources to start or expand your business. We also invite you to subscribe to our mailing list to receive notification of newly published business and finance articles.
Published on August 02, 2011 at 03:06 AM