Businesses should be advised to have a business bank account that meets their needs and supports their business development. Among other benefits that a business account can provide, it will help businesses to manage their payments and transactions while making it easier to complete their tax returns. If you have trouble deciding which bank account is best for your business, please read on as we discuss options and associated factors.
Types of business bank accounts
There are several types of business bank accounts, each with a unique function and structure to meet certain demands of the company. Based on the features of the accounts listed below, you may select the bank account you think is best for your business.
Banks have different features with respect to business current accounts.
Checking/current account - This let you manage all financial responsibilities required to run your business, including writing checks for payments, receiving and sending money, depositing cash and checks from clients, and taking out cash using a company debit card.
Savings account - You can safeguard your earnings and keep profits apart from working capital with the use of a savings account. It may be utilised in an emergency without requiring you to take money out of your own pocket.
Cash management account (CMA) - This is a non-bank cash account that is handled online, where you can save money, earn interest, and make withdrawals as needed. It is a type of account that functions similarly to checking, savings, and/or investment accounts, all under one roof. CMAs are often provided by non-bank financial service providers like broker-dealers or financial advisers. Because online-only services have little overhead, some CMAs are able to provide high interest rates together with reasonable or no costs.
What to look for when choosing a business bank account
Apart from the different types of business accounts, there are still several things to look out for when choosing a business bank account and these are:
Bank insured - This is probably the most crucial consideration. Ensure that the bank you choose is insured, depending on the country in which your company is located - by the Federal Deposit Insurance Corporation (FDIC) for American business owners, the Financial Services Compensation Scheme (FSCS) for UK business owners, or the Nigeria Deposit Insurance Corporation (NDIC) for Nigerian business owners.
Bank-required fees or charges - As a business owner, you ought to analyse these costs to see whether they will benefit your company in the long run. Most banks have various mandatory fees or charges that customers and businesses must abide by. Some of these are:
Wire transfer fees.
How efficient their app or website is - In the current digital era, most payments and transactions are made online or via apps. Examine their website and mobile application to see whether they are user-friendly, suitable for your organisation, and will function well for you. To find out how excellent or poor their service is, check reviews. You wouldn't want poor network and service to leave 50% of your transactions unfinished.
Perks, benefits, and incentives - Many banks provide various incentives, advantages, and benefits to business owners who open business accounts. Some of them include reduced deposit costs when creating a new account and other perks.
ATM access - For convenience, it is recommended that company owners choose a bank with a large network of ATMs in their local region.
Nearby access - The bank's proximity to your company should be taken into account. If you have any cause or concern to visit the bank, it would therefore be easy to stroll into a physical bank and speak with a bank representative in person.
Transaction limits - Certain banks may limit the number of digital transactions you may do with your business account. For every additional transaction beyond the predetermined limit, there will be a fee. If your business processes a lot of transactions, it is preferable to deal with a bank that doesn't impose transaction limitations rather than one that can manage your regular daily cycle of transactions or one that has big transaction limits in order to save money.
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