Building your business entails managing your finances, including cash flow, invoicing, payroll, expenses, and more. It all ties back to business banking, which can be confusing when you’re trying to learn the lingo and compare the options. In this article, we answer the questions we know you’re asking, starting with the one we hear the most.
1. What is business banking?
Business banking is a group of products, services, and solutions designed to help business owners separate personal and business finances, manage cash flow, streamline operations, and, ultimately, be successful in running a business. Checking accounts, savings accounts, cash management tools, business loans, and lines of credit are all examples of products offered through business banking. Your business banking suite will depend on your preferences and selections with your bank.
2. What is the difference between commercial and business banking?
Business banking is often synonymous with corporate banking and commercial banking. However, there are times when the terminology matters. For instance, a business bank account can be used for any type of business. A corporate bank account, meanwhile, may have more requirements. One article explains:
“The main difference between a corporate bank account and bank accounts for the other business entities is that opening a corporate bank account can only happen by a decision of the board of directors, evidenced by a corporate resolution.”
When it comes to commercial banking, the difference is usually in comparing commercial banking vs. retail banking. Commercial banking is business banking. Retail banking is personal banking.
3. What are business accounts used for?
The most common business account is a business checking account, which functions similarly to a personal account in that you deposit and withdraw money, conduct debit transactions, and pay bills. The features built into your business checking account should enable you to closely track cash flow, make transfers, and send payments. Many business owners also open a business savings account to put away reserve funds whenever possible, just like you would with a personal savings account. If your business secures a loan or line of credit, it would be considered an additional business account.
4. Do I need a business checking account?
If you’re serious about running and growing your company, a separate checking account is a best practice. This applies to freelancers, too! Skipping the step of setting up a business bank account is one of the most common financial pitfalls freelancers make when starting out.
5. How do I open a business account?
Many banks will allow you to apply for and open a business checking account online, but some might still require a visit to a branch office to meet with a representative. If you prefer the online route, consider an online-only bank. In order to open your business account, you will usually need to supply the following:
- Social Security number (for sole proprietors) or Employer Identification Number (for established entities)
- Personal identification
- Address verification
- An opening deposit (varies by bank)
- Additional paperwork required by your bank of choice in order to open a business checking account
If you come into the process with all of the above at the ready, you should have no trouble applying for the account of your choice.
6. What are business banking fees?
Many business bank accounts, particularly those at large banking institutions, have fees. Keep an eye out for a “monthly maintenance” or “monthly service” fee. If you see either, ask the bank if there is the potential for the fee to be waived. Other common business banking fees include transaction fees, cash handling fees, and any fees associated with add-on services. The goal, of course, is to avoid business banking fees whenever possible.
7. What services are included in business banking?
One of the best aspects of business banking is that it usually includes a full suite of tools that go above and beyond consumer checking. For example, an Azlo business account includes easy vendor payments, money transfers, invoicing, accounting software integrations, payment and point of sale integrations, mobile deposit, and more—all built into a single checking account. Outside of Azlo, these services vary from each bank to the next.
8. What is mobile deposit?
In all seriousness, mobile deposit allows you to use the camera app on your smartphone to take photos of the front and back of a check and deposit the check within your bank’s mobile app. That means no trip to the bank. If you plan on receiving checks for payments, mobile deposit is a helpful tool in a business bank account.
9. How do I choose a bank for my small business?
There are a lot of options out there; we know. If you’re just starting your business and do not yet have significant funds, you might gravitate to the bank with the fewest fees and lowest (or no) balance requirement. If your small business is well-established and expanding, the focus might be more on business lending. If you prefer to bank online, you might not need a bank with branch offices and can instead look to an online-only bank. Ultimately, the best business bank account for you will be the one that meets your needs and preferences.
10. What is the best bank for small business?
Again, it’s all about you and your business! What we can say is that we’ve dedicated our business at Azlo to providing business owners like you with no-fee, no-hassle, fully integrated business banking. Ready to apply for a business account online? Still have questions? We’re here to help.
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