For new entrepreneurs or business owners, financial management may seem like a hassle. Between all the in-behind-work to offer clients the best service, using a personal bank account can seem easier and quicker. However, striving for business banking can make all the difference when organizing and controlling the company’s resources. Let’s look at how to implement this and what difference it can make for your enterprise as of today.
What is Business Banking?
Is business banking personal or retail banking? Not quite, as it doesn’t focus on individuals, but on business owners, small and medium-sized enterprises (SMEs), startups, or big corporations. Just like its name implies, it refers to the financial institutions’ services specifically catered to businesses. Also known as commercial banking, the type of financial advice and assistance offered may include the following:
- Asset management.
- Business checking accounts.
- Deposit and savings accounts.
- Certificate of deposit (CD).
- Credit card services.
- Real estate and commercial loans.
As the business capacity and demand keep changing, so do its needs. Opening business banking accounts is the first step in managing the company’s transactions with professionalism and organization. Having both separate personal and business accounts will help you when detailing your overall business expenses, fees, and tax deductions.
Still not sure about its advantages? Here are 3 more reasons why your company will benefit from a business banking account:
- Clearly understand your financial situation by viewing your business income and your personal transactions individually.
- Access to capital and financing in a time of need through a loan given by a business line of credit.
- Build credibility for your clients’ base when it comes to transactions while offering them flexible paying methods like credit cards.
With business banking online taking over, there are now many solutions that aim to ease your financial management. As such, when thinking about what to look for when acquiring this, services can center around:
- Alerts and notifications.
- Pending transactions.
- Security and authorization methods.
- Payment to suppliers.
- Tax obligations.
- Real-time balance information.
- Salary payment distribution.
- Foreign exchange (FX).
Some banks require paying a monthly fee for using a business banking account. This type of payment may have to do with maintenance services, management, or going over the established number of transactions.
For some, the idea of paying this is more than enough for stopping them from acquiring a business banking account. However, as options are flexible, the following must be noted:
- Ranges may vary depending on the financial institution, so it’s best to weigh your options while comparing banks.
- Some banks may waive your monthly fee by meeting a specific set balance in your account.
- Online business banking offers fewer fees as a physical location isn´t being managed therefore reducing costs.
Though the specifics may vary depending on the specific situation and bank, some of the most common documentation may include:
- Employer Identification Number (EIN).
- Social Security Number (SSN).
- Photo ID.
- Business license.
Additionally, once your application has been approved, your bank may ask for an initial deposit to your business account.
The first step is to browse and evaluate the options given by the desired banks. Some aspects to take into consideration have to do with:
- Fees and competitive interest rates.
- Accessibility regarding branch and ATM location.
- Transaction limits including deposits and withdrawals.
- Account and payroll integration.
- Functional digital features like both mobile and online banking.
The solution for your company’s financial management can be adapted through a business banking account. With the right information, it’s possible to provide customers with the best experience all while keeping up with your entrepreneurship goals.