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Updated on Monday, October 12, 2020
You’ve poured your heart and soul into the small business you founded, but when it comes to financing day-to-day operations, you’ll need to strictly separate your personal wealth from your business funds. A business money market account can help provide a safe place for your company’s cash, allowing it to earn relatively high interest while still remaining liquid enough to take care of business expenses.
Scouring our database for the business money market accounts that earn the highest APY and are available nationwide, we’ve come up with the best places for you to keep the money that funds your business.
The best business money market accounts
|Institution||APY||Minimum balance to earn APY||Maximum balance to earn APY|
Premier Members Credit Union
Affinity Federal Credit Union
Latino Credit Union
Service Credit Union
Premier America Credit Union
First Internet Bank
Premier Members Credit Union — Business Money Market account
While you’ll only earn the attractive 2.00% APY on your first $2,000 — with a minimum deposit of only $5 — Premier Members Credit Union’s rate is still significantly higher than the following spots on our list. Balances between $2,000 and $5,000 will net you a still competitive 0.50% APY, and the APY between $5,000 and $10,000 is a decent 0.35%. Once you go over the $10,000 mark, you’ll want to consider the other banks on this list.
Premier Members Credit Union is available mostly to people and companies in the Colorado area, but anyone can join through their affiliation with Impact on Education, the primary charity for the Boulder Valley School District.
Affinity Federal Credit Union — Business Money Manager Account
A balance of just $2,500 earns you the APY on Affinity Federal Credit Union’s Business Money Manager Account. You need at least $2,500 to open this account, and you’ll get hit with a $10 monthly fee if your average daily balance falls below that amount on any given day.
As a credit union, Affinity requires you to become a member before you can open an account, including the Business Money Manager Account. One way to join is by making a $5 donation to the New Jersey Coalition for Financial Education or the Connecticut Jump$tart Coalition.
TAB Bank — Business Money Market account
Not associated with the diet soda for people who need to feel different, TAB Bank offers a business money market account that’s nonetheless pretty sweet, earning an APY of 0.50% on all balances over $1. You will, however, need to deposit at least $25 to open this account (and if that’s a problem then maybe you have bigger fish to fry than choosing the right money market account for your business.)
Paramount Bank — Money Market Deposit
Paramount Bank began in Missouri in 1970 and has evolved so that today it offers a wide range of products, including its business money market deposit account. Make sure you’re able to keep at least $5,000 in the money market account before committing to it, however, because if your balance drops below this level, you’ll pay a $20 monthly fee. Paramount also offers small business checking. It won’t earn you an APY but can be opened with just $100.
Latino Credit Union — Micro Business Money Market Account
To become a member of Latino Credit Union and enjoy this rate, you’ll need to pay a one-time membership fee of $10 to the Latino Community Development Center, which goes toward providing financial education. A $1,000 minimum initial deposit and balance will net you 0.75% APY. Your money is federally insured up to $250,000 by the National Credit Union Administration.
nbkc bank — Business Money Market Savings account
This Kansas-based bank offers a decent interest rate on its Business Money Market Savings account. With no minimum deposit, you can open this account and start earning 0.60% APY.
While nbkc charges very little in terms of fees, keep in mind the six withdrawal per month limit on money market accounts stems from federal regulations and isn’t subject to the whims of individual financial institutions. If you need to access your money more frequently, you may want to consider supplementing your money market account with a business checking account.
Service Credit Union — Business Money Market account
For a minimum investment of $25,000, your money will earn at this APY. If you need to scale that back, you’ll still get a rate that hovers near our top 10 for any amount of $2,500 and over. This is just one business savings product offered by Service Credit Union. You can also get a savings, secondary savings or CD for your business funds.
If you live or work in the state of New Hampshire or the Falmouth, Mass., area, you can join Service Credit Union. Membership is also open to active duty military, veterans and their families, as well as employees and former employees of the Department of Defense and their families. You’re also eligible for membership if you join the American Consumer Council; if you use the promo code “Service,” membership is free.
Premier America Credit Union — Business Tiered Money Market account
The more you can contribute to this tiered money market account, the higher APY you’ll earn. To get this APY, you’ll need to invest between $25,000 and $50,000. Anything less (but still above $2,500) will still get you an APY that would just miss this list by a hair. As you climb the tiers, you’ll also jump up 0.90%.
Premier America has been around since 1957 and can easily be joined outside California through membership to the Thousand Oaks Alliance for the Arts.
Axos Bank — Business Money Market account
Axos Bank offers its APY of 0.50% to accounts with balances ranging from $0 to $5 million. However, there is a $1,000 minimum opening deposit, and you’ll need to maintain an average daily balance of at least $5,000.
As with the other accounts on the list, you’ll be allowed up to six transactions per month. This account is targeted to small business owners who want to grow their funds quickly.
Axos Bank is a digital bank with headquarters in San Diego, California.
First Internet Bank — Business Money Market Savings account
This online-only bank has a real knack for offering customers competitive rates with its money market accounts, and its business product doesn’t stray from the pattern. Account holders can expect an APY of 0.50%, so long as they make the minimum deposit of $100 to open the account. There’s no minimum balance needed to earn the APY, but a $5 monthly fee will be charged by First Internet Bank if the average daily balance for that month falls below $4,000.
Business money market accounts vs. business savings accounts
Since both business money market accounts and business savings accounts earn a comparatively high interest rate and give you a place to deposit your business funds separate from your personal money, how should you go about choosing between the two products? While nothing is wrong with a business savings account, money market accounts hold two distinct advantages over them:
- Higher APYs: While not true across the board, money market accounts earn higher interest than savings accounts in general. For example, looking at the rate tables at DepositAccounts.com, the average business savings account available nationwide is 0.126%. When compared to the APYs listed above, all of which are at 0.50% and above, it’s clear that business money market accounts earn higher rates.
- Easier Access to Funds: Business savings accounts don’t generally come with a debit card or checks to help depositors withdraw their funds from the account. While these features aren’t universal with business money market accounts, they’re more prevalent compared to other types of accounts. However, both money market accounts and savings accounts fall under the jurisdiction of the Federal Reserve Board’s Regulation D, which only allows a maximum of six withdrawals from the account each month.
Business money market accounts vs. CDs or checking accounts
While a business money market account earns a high APY and — if it comes with perks such as online banking, checks and/or a debit card — allows easy access to funds, it can’t have the same liquidity as a checking account. For regular business expenses you need to pay with any sort of frequency, you’ll need a checking account from which you’ll pay vendors, staff, etc. However as with personal checking accounts, don’t expect to earn a high APY.
Certificates of deposit (CDs) are the most restrictive product in terms of liquidity — unless you’re dealing with the relatively-rare CD, which incurs no penalty for early withdrawals, the money you’ve deposited is untouchable until the certificate matures. However, CDs do have the advantage of locking in your money at fixed interest rates (whereas the bank can change how much interest the money in a money market or savings account earns whenever it wants) and earning the highest APY.
Why you need to separate your business and personal banking
There’s nothing explicitly stopping you legally from funding your business with your personal money, but doing so is generally frowned upon for the following reasons:
- You remove any legal distinction between you and your business: To paraphrase a certain businessman-turned-president, “Corporations are people too.” This becomes more than a campaign slogan when you’ve mingled your personal and business finances and someone successfully sues your business. If a court takes a look at your books and determines there’s no real distinction between your business’s finances and your personal wealth, they can include your own money in any damages that have to be paid.
- The IRS won’t let you deduct expenses: Even though you consider your Etsy shop a budding corporate empire, the IRS has its own definition of what constitutes a business versus what’s a hobby that makes you money — and changes what you can deduct based on its decision. One of the first criteria the IRS lists is “Whether you carry on the activity in a businesslike manner and maintain complete and accurate books and records” (emphasis ours). Having separate accounts goes a long way toward proving your hobby is actually a legitimate business.
What do I need to open a Business Money Market Account?
While the exact materials and information needed to open one of these accounts varies by institution, you should probably have on hand the following information when you’re ready to open an account:
- Employer Identification Number (this is a nine-digit number you receive after applying to the IRS which, if you own a business, you probably already have).
- A legal document indicating when the business was formed
- Your own social security number or government-issued ID
You may need additional information depending on how your company is structured (if you aren’t the sole proprietor, for example, you’ll probably need to provide ownership papers to the bank), but the above is a good place to start when gathering the materials you’ll need to open one of these accounts.