One of the first things business owners must do is open a bank account. Before heading to a bank to open a business account, there are some things to keep in mind.
The first thing to consider is which financial institution is best. Some banks specialize in banking with small businesses and may offer better services.
Before setting foot in a bank, research the types of accounts that are available to business owners. The trend in banking is free checking accounts. These are good for small business owners who don’t have too many transactions per month. They come with a minimum balance requirement and customers can complete a limited number of transactions for free. As businesses grow, owners can upgrade to accounts that allow for more transactions, but with a monthly fee.
At JPMorgan Chase & Co., business owners with revenues up to $10 million can open an account with just $25. At First National Bank of Omaha business owners can take advantage of a "Business First Free Checking” account that requires a $100 minimum opening balance but has no minimum balance requirement. David Ely, professor of finance at San Diego State University, emphasizes that business owners keep in mind the total cost of balance requirements and fees.
“You’re not just looking at the terms of the deposit accounts, but also look at it in terms of fees. Consider what’s the cost of the full relationship,” Ely told BusinessNewsDaily.
These days business banking customers can find lines of credit and cash management services at banks in addition to business checking accounts. Be prepared for a sales pitch: Bankers will push their other products because that’s where they make their money. Consider what kind of relationship with the bank is best. Is a deposit account all that’s needed, or more?
“A lot of businesses are exploring their options [in terms of] of what the government stimulus programs can do for them. Talk to your banker because they’re the best connections for you,” said Clint Sporhase, of First National Bank of Omaha.
Be sure to research what kinds of documents will be needed to open a bank account. Documentation requirements vary depending on the type of business. Corporations will need more documentation than a sole proprietor. In fact, sole proprietors are considered more like a consumer, so required documents should be minimal. A tax ID and social security number are generally all you need. Corporations need more documentation – including articles of incorporation and a certificate of good standing with the state.
Once the account is established, consider connecting it to your accounting software. Most banks offer online banking which can be linked your accounting software .