Different Types of Business Checking Accounts
In the broad category of commercial lending and deposits, there’s a whole universe of financial products and services designed to support your financial journey. Business CDs, lines of credit, payroll services, treasury and cash management…the list goes on and on. However, today we’re focusing on the financial heart of your business: the humble checking account. Think of it as the unsung hero, quietly managing your day-to-day transactions while you focus on the big picture. Although your business checking account may not be exciting, it’s an important tool and one you should put thought into choosing—not all business checking accounts are created equal!
What Is a Basic Business Checking Account?
A basic business checking account offers essential banking services such as depositing checks, making withdrawals, and exchanging electronic transactions. It’s designed for daily operational activities, providing a straightforward way to manage cash flow. A basic business account typically has lower fees and minimum balance requirements.
Do I Need an EIN To Get a Business Checking Account?
Typically yes, most financial institutions require an Employer Identification Number (EIN) to open a business checking account. This IRS-issued number is used for your business tax purposes and helps establish your company as a separate legal entity.
How Many Basic Types of Business Checking Accounts Are There?
Types of business checking accounts include basic, interest-bearing, and analyzed accounts. Each caters to different business needs, from small startups to large corporations, offering varying features like transaction limits, fee structures, and interest opportunities.
- Basic accounts are low-cost, offering essential features for managing daily financial transactions. Indiana Members Credit Union’s free business checking accounts cover all your bases with no minimum balance or monthly fees, 1,000 free transactions each month, online and mobile banking, bill pay, e-statements, and a free instant issue debit card.
- Interest-bearing accounts allow businesses to earn interest on their account balances, enhancing their earning potential. At IMCU, you’ll find a great option with our business checking with dividends. This account style is perfect for businesses that maintain higher balances, experience lower monthly transaction activity, and are looking for an account that pays.
- Analyzed accounts provide detailed financial information and services, which is often ideal for larger businesses with high transaction volumes. This may come at a higher price than other types of accounts. IMCU’s business checking with analysis is designed for larger businesses with higher monthly transaction volumes—and, it’s important to keep in mind that the earnings credit on balances may offset activity fees.
What Is a Business Checking Account Commonly Used For?
A business checking account is mostly used for handling day-to-day money transactions. You’ll typically use this account for operational details like facilitating payroll processes, paying vendors, purchasing supplies or inventory, and processing customer payments. These accounts are important for keeping your business finances organized and separate from your personal finances.
How Do I Find the Best Business Checking Account for My Company?
The first step to finding the best business checking account is evaluating your company’s specific needs. Ask questions like:
- How many transactions do I make monthly?
It’s important to look for accounts that will accommodate your business’s cash flow and see if there are charges for exceeding the transaction limit.
- Can I afford to pay for a checking account?
Some accounts have monthly maintenance fees—however, they often come with extra benefits like higher transaction limits or better interest rates. Be sure to consider if the benefits are worth the expense.
- Will maintaining the minimum balance be difficult?
Many business checking accounts have a minimum balance requirement, so be sure to inquire about how much money will be tied up to avoid fees.
- Will my money work for me?
Finding a business checking account that earns interest is a way to have your money make money for you, especially when you’re going to keep some money in that account to meet a minimum balance requirement. Keep in mind that a free business checking account may not earn you interest—a paid account may actually end up earning you money with interest and/or giving you benefits that are worth the expense.
As an added benefit that comes with business checking accounts from certain lenders—like IMCU—you can also take advantage of a selection of treasury services that can increase transactional efficiency and prevent fraud. With an IMCU business checking account, you’ll also receive a business debit card, digital banking, mobile deposit, bill pay, and eStatements—all included at no additional charge!