You’ve decided to take the leap and launch a new business. Great! A dedicated small business bank account sets your venture up with a solid financial foundation, helping you stay organized and profession, and making it easier to manage your operations. While it may be tempting to use a personal banking account for business transactions, doing so can lead to confusion, making it harder to track cash flow, and perhaps even cause tax headaches down the road.
The right business banking account can simplify your financial management and grow along with your company. Here are four key considerations when choosing a business banking account:
1. Monthly fees and account charges
As a business owner, you need to be watching what goes in and what comes out – and this includes monthly fees and account charges. Banking fees can add up quickly, but don’t mistake a low-fee account as being the most economical option. Different types of accounts will come with different fees, and accounts with minimal fees may equal transaction limits, which might not work depending on the type of business you are operating.
For example, Meridian’s e-Prosper account offers five free personal service transactions and unlimited self-serve transactions with a monthly fee of $9 that is waived with a minimum monthly balance of $5,000. If you plan to be transacting more frequently in branch, the Prosper chequing account for small business offers unlimited transactions with a monthly fee of $25, which is waived with a minimum monthly balance of $25,000. While a higher monthly fee may not seem ideal at first, accounts with transaction limits mean additional fees can add up quickly, so it may be necessary to reassess options over time.
Business owners have to plan accordingly to ensure money is accumulating in their account. Depending on the nature of your business, the number of transactions per month – and the way you accept payment – may vary. For example, a retail business may not accept Interac eTransfers, but will process most payment through debit or credit transactions. It’s important to pay attention to the number of transactions completed per month, and ensure that your account supports the volume of transactions. It’s also crucial to watch for returned payments and keep an eye on what’s coming in and what’s going out.
2. Look for personalized service
Starting a business comes with lots of tasks that require research and expertise, and small businesses owners may the options available to them. Having a banking partner who understands your business’s specific challenges is crucial – in many cases, a banking advisor becomes an unofficial business partner, helping you make decisions that will impact the success of your company. When you’re looking for a financial partner, treat it as though you are interviewing an employee for your business. Find an advisor who knows the ins and outs of running a small business, and who can provide personalized financial advice tailored to your goals and challenges, and answer questions you have along the way. This level of customer support is essential for navigating complex financial decisions as your business evolves.
Your advisor may also be able to point you in the direction of local industry associations or chambers of commerce to network with and access support from other small business owners. Oftentimes, these groups can offer discounted pricing, free workshops or other partnerships with financial benefits. And, having a solid relationship with your banking advisor can help you prevent falling victim to fraudulent activity, as you’ll know who you’re dealing with for each transaction.
3. Account accessibility, both online and in-person
For small business owners, being able to manage finances on the go is critical. Once the logistics are in place and your business is up and running, you’ll want to be able to access your business banking account digitally, including mobile cheque depositing, payroll management and account statement review. These online services make planning and inventory purchasing easier. While you may need to visit a branch for things like depositing cash or sending wire transfers, most banking tasks can now be done through a computer or smart phone, saving time – one of an entrepreneur’s most precious commodities. And, as your business grows, consider how easily you can scale up or modify account features, like upgrading banking options if your business becomes more complex.
Whether you prefer online banking or need regular branch access, ensure your financial partner provides reliable customer service for resolving issues quickly, and easy and convenient ways to manage your finances, ensuring smooth business operations.
4. Consider future growth
As your business grows, so will your options and banking needs. Flexibility in account features is essential as your business transitions from startup to growth stages. Look for a bank that offers scalable account options so that you can easily upgrade as your transactions increase without disrupting your operations.
The growth of your company should also be reflected in the growth of your relationship with your banking partner. Where you put your money matters, and your banking partner should be aligned with your goals and values. Your advisor should become a trusted resource to help review your business’s account options and features to ensure they meet the needs of a growing business.
Choosing the right small business bank account is a foundational step for effectively managing your small business finances. With a clear understanding of your banking needs, a solid relationship with your financial partner, and account options that can scale with your business, you can focus more on growing your small business and less on financial headaches, setting the stage for long-term success.
For deeper discussion on more growth and less headaches, reach out to a Meridian small business advisor.
