A business bank account is necessary to separate your personal and business assets. Unfortunately, they often come at a cost that can negatively impact your bottom line unless you do the legwork to find fee-free options. If you’ve explored banking options but haven’t had much luck identifying those with little or no fees, here’s what to do next.
Small Business Bank Accounts: At-a-Glance
The most common types of small business bank accounts are checking accounts and savings accounts. Checking accounts are designed to make purchases, pay bills, receive cash deposits or electronic payroll deposits for earnings and make withdrawals. However, savings accounts are decided to store funds that are easily accessible in the event of a financial emergency or if your company experiences a cash-flow issue.
Merchant accounts and investment accounts are also offered to small businesses by banks. You’ll need a merchant account to accept credit and debit card payments. And as the name suggests, investment accounts are used to help grow your company’s assets. These include cash, stocks, bonds, mutual funds and exchange-traded funds (ETFs).
How Can a Business Bank Account Help Your Business?
There are several ways a business bank account can benefit your company:
- You’ll have a professional image.
- You can manage cash flow more effectively.
- You can set up payroll to compensate your employees with ease.
- You can receive a debit card, credit card and electronic payments with a merchant account.
- You can start building business credit.
- You can earn a return on your company’s earnings.
- You can shield your personal assets from liability if business debts become delinquent (assuming there’s no personal guarantee).
- You can monitor sales and expenditures to identify trends and areas that need improvement.
- You can facilitate the tax preparation process by conducting all your company’s transactions through a single account.
- You can start building a relationship with a financial institution to unlock funding small business funding opportunities in the future.
Are There Small Business Bank Accounts with No Fees?
Yes, there are fee-free small business bank accounts nationwide.
No Strings Attached (No Monthly Service Fee)
Some business accounts are truly free with no strings attached. That means they do not come with a monthly service fee.
Online banks and credit unions generally feature commercial accounts with little to no fees since they don’t have the same overhead costs as traditional banks. Plus, credit unions don’t have the same commercial ax to grind since they are member-owned and pass cost savings on to account holders.
Free If You Meet Certain Criteria
Other small business bank accounts are free if you meet specific criteria. To illustrate, some come with a monthly maintenance fee that can be waived if you carry a minimum daily balance. Or you could qualify for a fee waiver on a business checking account if you use your debit card a certain number of times monthly to make purchases.
How to Find a Small Business Bank Account No Fees
Here are some tips to help you find a small business bank with no fees that best suits your company’s needs:
Assess Your Business Needs
Beyond making purchases and deposits, how do you plan to use your business bank account? Will you make recurring deposits or electronic payments? Do you need payroll processing capabilities? Will your company accept debit or credit cards? The answer to this question will help determine what features are accessible with any accounts you consider.
Review Fine Print for Hidden Fees
It’s not uncommon for business bank accounts to have monthly maintenance fees, minimum balance fees, overdraft fees, wire transfer fees, out-of-network fees and excessive withdrawal fees. However, the goal is to pay little to no fees for business banking, so you’ll need to read the fine print of the accounts you’re considering and select the option that will cost you the least amount of money.
Confirm Transaction and Deposit Limits
Does the financial institution impose daily or monthly transaction limits? Are there restrictions in place for deposits? Also, analyze these limits (if applicable) to find a suitable business bank account. Ideally, you want an option that doesn’t charge monthly fees or other banking-related fees to enjoy a completely free business banking experience.
Understand the Terms and Conditions
Are there other terms and conditions to be aware of? For example, if there are opening bonuses or fee waivers, what’s needed to take advantage of these incentives? Is there fine print beyond what’s advertised to be aware of to minimize banking costs?
Look at Other Bank Services and Features
Beyond fee-free banking, it’s vital to consider the other services and features the bank offers. As mentioned above, these include merchant services to accept debit and credit cards and payroll-processing capabilities. If you plan to take out a business loan, apply for a credit card or open a line of credit in the near future, it’s also ideal if the financial institution features these services.
Check for Perks and Rewards
You may qualify for a cash-back incentive when opening a business bank account and meeting certain guidelines within a set period. Some business checking accounts also come with debit cards offering cash-back rewards on everyday purchases. Or you may have access to helpful software and resources to help manage your company’s finances more effectively.
How to Open a Small Business Bank Account No Fees
Online banks make it easy to open a business bank account while on the go or from the comfort of your home or office. This option is also available with select brick-and-mortar banks and credit unions. However, there are instances where you have to sit down with a business banker to apply for a business bank account.
When you’re ready to get started, here’s what most banks require to apply for a business bank account:
- Photocopy of your driver’s license, state-issued identification card or passport
- Business formation documents
- Business licenses (if applicable)
- Business operating agreement (if applicable)
- Fictitious business name certificate (if applicable)
- Employer identification number (EIN) or Social Security number if you operate a sole proprietor and do not have an EIN
Be sure to complete the entire application for a bank account and review for errors that could result in processing delays.
Frequently Asked Questions (FAQs)
No, you may not be required to make a deposit to open a fee-free small business bank account. In fact, this is common with online banks and select regional and community banks.
Yes, many online banks offer checking accounts with no minimum opening deposit requirement.
It depends on your company’s unique banking needs. If possible, narrow down your top options to traditional banks, credit unions and online banks offering fee waivers in exchange for terms and conditions you can easily meet.
