Best Business Checking Accounts
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Updated on Monday, January 11, 2021
If you’re starting a business, one of the first steps to take is opening a business checking account. Being able to make transactions and deposit funds is an essential component of actually doing business, after all.
Every business owner will need different things from their checking account, based on factors like how many transactions you make per month and what kind of minimum balance you can manage. However, these are the basic business checking account features you need to look for:
- Low transaction fees
- Low minimum opening deposit and minimum balance requirements
- High interest rates
- Access to physical bank branches
- Extensive ATM network
Since finding the right account can be a chore, we’ve compiled a round-up of the best business checking accounts that are currently available. Every month, we review business checking account rates using data from another LendingTree company, DepositAccounts.com, a database of offerings at more than 17,100 banks and credit unions. We sorted the products by APY, then eliminated institutions that were not available nationwide and did not meet the five criteria above.
To make the cut, the account needed to have minimal fees, a minimum of 50 transactions per month and the option to waive monthly fees if certain requirements are met. While offering an APY wasn’t a requirement, it was taken into consideration when developing this list.
- Best Business Checking Accounts of January 2021
- Business checking accounts vs. personal checking accounts
- Why you need a business checking account
- Benefits of a business checking account
- What you need to open a business checking account
Best Business Checking Accounts of January 2021
Account Name | Minimum Balance to Waive Monthly Fee | Number of Transactions Per Month with No Charge | APY |
---|---|---|---|
N/A | Unlimited | 1.00% | |
Average daily balance of $5,000 | Up to 50 | 0.81% | |
Average monthly balance of $5,000 | Unlimited | 0.10% | |
Daily balance of $5,000 | First 200 items | None | |
None, but must enroll in paperless statements | Up to 175 items | None | |
Prior 30- or 90-day average account balance of $25,000 | Unlimited | None | |
N/A | Unlimited | None | |
Average monthly balance of $15,000 | 500 | None | |
Average monthly collected balance of $500 | Up to 150 transactions | None |
Business checking accounts vs. personal checking accounts
At first glance, business checking accounts versus personal checking accounts might seem fairly similar. But if you take a closer look, you can understand the key differences. While every account has its differing features, personal checking accounts usually have:
- No or low monthly service fees
- No extra fees
- Higher APYs
- Overdraft protection
Meanwhile, business checking accounts often have:
- Monthly service fees or minimum balance requirements to waive them
- Lower APYs
- Extra fees for actions ranging from having an excess of transactions to depositing cash
- More documentation required to open an account
- The option to order employee debit cards
Why you need a business checking account
If you’re a business owner, you might be wondering why you even have to open a checking account separate from your personal one. After all, personal checking accounts tend to have lower fees, higher APYs and better features. Why not just skip opening one and — when it comes to your checking accounts — mix business with pleasure?
There are several reasons why you should keep your work and personal checking accounts from co-mingling. First and foremost: If you operate your business as a legal entity that is separate from you – say, as an LLC – you’re legally required to keep your personal and business finances separate. Opening a business checking account is the simplest way to do that.
Another reason why you need a checking account for your business is to protect yourself. If you have structured your business entity as a corporation or an LLC, and you have a separate checking account for your business, you and other shareholders’ personal assets are not likely to be seized for damages your company is obligated to pay when filing for bankruptcy.
Benefits of a business checking account
There are a number of other benefits associated with maintaining a business checking account, aside from the obvious ones of following the law and protecting your personal assets. Those benefits can include:
- Keeping your business records organized. This will make it easier to track your business’s profitability and assess its performance.
- Simplifying your taxes. By keeping your personal and business checking accounts separate, it will be easier for you to file your taxes accurately and avoid penalties from the IRS. Also, it will make it easier for you to deduct business expenses from your taxes.
- Being able to accept credit cards as a form of payment, either by setting up a merchant system or credit acceptance system.
- Being able to allow your employees to use the business checking account.
What you need to open a business checking account
When opening a business checking account, you need more than just a spiffy company name and logo. You’ll typically be required to present the following documents:
- Employer Identification Number (EIN) or Social Security number if it’s a sole proprietorship
- Your business’s formation documents
- Ownership agreements
- Business license
Opening a business checking account might be one of the first, big business decisions you will make as an entrepreneur. Make sure it’s an informed decision: Do your research, come with questions and be confident about the account you are opening before signing on the dotted line.