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. Are low fee accounts always better?
Business owners should closely monitor all money coming in and going out, including banking fees. Although low‑fee accounts may look like the cheapest option, they can come with transaction limits. If your business exceeds those limits, extra fees can quickly add up, making the account more expensive than expected.
For example, Meridian’s e‑Prosper Business Account includes:
- Five free personal service transactions
- Unlimited self‑serve transactions
- A $9 monthly fee, waived with a minimum monthly balance of $5,000
If your business requires frequent in‑branch transactions, the Prosper Small Business Chequing Account may be a better fit.
It offers:
- Unlimited transactions
- A $25 monthly fee, waived with a minimum monthly balance of $25,000
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. Small business banking with personalized financial guidance
A qualified small business banking advisor should be able to help you with:
- Choosing the right business chequing and savings accounts
- Managing cash flow and monthly transaction limits
- Understanding business loans, lines of credit, and financing options
- Setting up payment processing, including debit, credit, and eTransfers
- Adjusting banking services as your business grows
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. Digital Business Banking for Everyday Tasks
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.
Online and mobile business banking tools make it easier to:
- Deposit cheques using a smartphone
- Review account balances and statements
- Manage payroll and outgoing payments
- Plan inventory purchases and cash flow
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.