How to Streamline Your Business Finances with a Business Checking Account

When you’re a small business owner, it’s essential to manage your business finances properly. It can be time-consuming to oversee business accounts and cash flow, generate financial reports and make sure that you have the working capital you need to achieve your business goals.

At Addition Financial, we talk to our business members about financial issues every day. We understand that if you can streamline your business finances, you’ll have more time to attract new customers or clients and strategize ways to outpace your competitors. With that in mind, here’s our guide to streamlining your business finances with a small business checking account.

Why Are the Key Features to Look for in a Business Checking Account?

Business checking accounts are designed to be used by businesses, with features that allow them to streamline their cash management. Here are some key features that you should look for when choosing a business checking account:

  • Low minimum deposit for account opening. If your business is just getting started, you may want to choose a business checking account with a low minimum deposit requirement. For example, Addition Financial’s business checking accounts require only a $100 minimum deposit.
  • Bill payment services. You can eliminate the need to spend your valuable time reviewing bills and cutting checks by choosing a business checking account with a bill payment service. You can simply link your bills directly to your account and schedule them for automatic payments.
  • Merchant payments. If you want to accept credit card payments from your customers, choose a business banking account that includes processing of merchant payments. Keep in mind that there’s usually an additional fee for merchant services.
  • Business debit card. Having a business debit card makes it easy to access the money in your account when you need cash.
  • Invoicing. Some business checking accounts include the option to create and send invoices for your business.
  • Integration with accounting software. When you can link your business checking account directly to your accounting or bookkeeping software, it’s easy to maintain accurate financial records.
  • Check-writing services. Some financial institutions provide a check-writing service that allows business owners to enter information for checks, and then prints and mails the check on the business owner’s behalf.
  • Mobile and online banking. Choosing a checking account with robust online and mobile banking services can streamline your finances by giving you 24/7 access to your account, with the ability to take advantage of mobile deposit for checks and other features.
  • Transaction limits. Some business checking accounts come with limits on monthly transactions, so be sure that you understand what you’re getting.
  • Fee waivers for higher balances. While it’s common for business checking accounts to charge monthly fees or a monthly service charge, many credit unions and banks waive fees for businesses that maintain balances over a set limit.

There may be other business account features that are important to you, such as a safe deposit box. We suggest making a list of your most important requirements before you compare accounts.

Why is a Business Checking Account Important for Streamlining Business Finances?

There are many benefits of a business checking account, including some that relate to streamlining your business finances.

Automate Your Bookkeeping

One of the most significant streamlining benefits of a business checking account is that you can automate your bookkeeping if you choose a financial institution that integrates with your bookkeeping software. You’ll eliminate the need for data entry and ensure that your business checking account and your books match.

Organize Your Finances

It’s common for business checking accounts to allow business owners to categorize each transaction. Doing so means that you can easily run reports to get an overview of your finances and get access to the information you need when you need it.

Build Business Credit

Building business credit is necessary if you want to grow or scale your business. For example, with a solid business credit score, you can attract investors, qualify for small business loans and other types of financing, and negotiate favorable payment terms with your vendors and suppliers. A good credit score can also help you get the most advantageous interest rates if you apply for a loan or business line of credit.

Track and File Taxes

It’s not uncommon for small business owners, particularly those who begin as sole proprietors, to use one bank account for both personal and business finances. Opening a business checking account makes it easy to separate your finances and keep accurate records to file your taxes. It shows the Internal Revenue Service that you’re serious about your business and it’s easy to pull reports and information you need to give to your accountant as they prepare your business tax return.

Are There Any Fees Associated with a Business Checking Account?

There are several fees that may be associated with a business checking account. These vary from one financial institution to another, so you should always ask and be sure to read the fine print to look for hidden fees:

  • Monthly maintenance fees. Common but may be waived if you meet a minimum balance requirement.
  • ATM fees. These fees and surcharges may apply if you use an out-of-network ATM, or your account may place a cap on ATM transactions each month.
  • Minimum balance fees. These fees may kick in if your balance is below a specified amount.
  • Wire transfer fees. These can apply if you use a wire transfer to send money, there may also be a fee if you receive a wire transfer.
  • Overdraft fees. A universal feature of checking accounts and applied if you write a check with insufficient funds.

Make sure you understand all applicable fees and compare them among accounts before deciding on a business checking account.

Trying to find your ideal checking account?

How Can a Business Checking Account Aid in Tax Preparation?

We’ve already mentioned that having a business checking account can aid in tax preparation. For example, some business checking accounts will automatically sort your income and expenses into the appropriate tax categories, making it easy to identify items in each category as you prepare your taxes.

You may be able to run reports that list all business expenditures, making it easy to identify potential tax deductions and itemize them.

In the event your business is audited, having a business checking account will simplify and streamline the process, allowing you to give the auditor what they need to verify your finances and complete the audit quickly.

Ultimately, you want to be sure that your financial institution’s records and your records match. Opening a business checking account makes errors less likely and can help you organize your finances and prepare your taxes easily.

What Are Some Tips for Choosing the Right Business Checking Account for Your Business?

These are some of the features and protections you should look for when choosing a business checking account:

  • NCUA/FDIC protection. Credit union accounts are insured by the NCUA and bank accounts by the FDIC. Always choose an insured account to protect yourself. 
  • Introductory offer. Some financial institutions offer lower fees or a cash bonus to new business account holders.
  • Business finance tools. Look for integration with your bookkeeping or accounting software, reporting, check writing and other business features to help you streamline your finances.
  • Secure online and mobile banking. You want secure tools that will allow you to access your account and money at any time without having to worry about security issues.
  • Transaction limits. It’s common for business checking accounts to impose some limits on the number of monthly transactions. You should compare your usual monthly activity with the limits to make sure you choose the right account for your needs.
  • Proximity of branches/ATMs. Choose a financial institution with at least one nearby branch, especially if you know you’ll need to make an occasional (or daily) cash deposit. You’ll also want to be sure you have access to ATMs.
  • Competitive business credit cards & loans. It can be useful to have your checking account at a financial institution that offers competitive loan rates and credit card offers..

You’ll need to decide which features and tools are most important to you and how much you’re willing to pay in fees before you narrow your choices and pick a checking account for your business.

Streamline Your Small Business Finances with Addition Financial

Opening a business checking account can help you to organize and streamline your finances, eliminating repetitive tasks. You’ll always know what’s happening with your money and you can take advantage of business financial tools and features to help you manage your money effectively and achieve your business goals.

Do you need a business checking account with useful features and affordable fees? Addition Financial is here to help! Click here to learn about our business checking accounts and open an account today.

The content provided here is not legal, tax, accounting, financial or investment advice. Please consult with legal, tax, accounting, financial or investment professionals based on your specific needs or questions you may have. We do not make any guarantees as to accuracy or completeness of this information, do not support any third-party companies, products, or services described here, and take no liability or legal obligations for your use of this information.