How to get started in business banking
The process of choosing the right business banking products can be much more tedious than creating new products and designing an online storefront.
Although it is important to understand things such as when to open a bank account for a company, how to get a line of credit for a company, and what to look out in a rewards program for business banking, merchants often ignore these factors or base their decisions on the same criteria they use when selecting personal financial products.
It is important to choose the right products for your business and understand what you should look for. This will help ensure that your online business succeeds. You can save time, avoid unnecessary fees and spend less time evaluating financial products. Instead, focus your efforts on the things that really matter: customer service and growing your business.
This post will discuss a variety of business banking products. We will discuss some of the products that you should look into before or shortly after starting your business.
Different types of banking products for business
Business banking products, as their name suggests, are financial products and services that are tailored to the needs of business. These products can be very similar to those for individuals, but they have different eligibility criteria, interest rate, and terms than standard financial products.
These banks offer these products to most online merchants. These banks are different from investment banks. They are usually larger than retail banks. They typically serve institutional investors such as hedge funds or entities that operate in capital markets.
These are common business banking products:
- Bank accounts for business
- Debit and credit cards
- Online banking for business
- Lines of Credit, such as equipment financing and loans
- Services for cash management
- Payroll services
There are no two businesses exactly the same. Two businesses in the same industry may have different banking requirements. However, online merchants can still benefit from basic business banking products if the terms are right.
Let’s look at the most popular business banking products and what to look out for.
Bank accounts for business
A business bank account is one of the most important products in business banking.
A business bank account is essential for keeping your personal finances separate from your business finances. Although it may sound obvious, many merchants fail open a bank account for their business when they launch their ventures. Later, they find that it is difficult, or impossible, to separate their business finances.
A single bank account can be used for business and personal transactions. This can lead to tax liabilities, as well as other problems. This is more than just a headache, it can also be a significant legal problem.
A bank account for your business is another reason to open one. This can help you establish your business as a legitimate entity. A dedicated account can make a business feel more real for many first-time entrepreneurs. This can increase their commitment and resolve to succeed in their venture.
What should you look for when looking at a bank account for a business?
Fees are a key factor when looking for a bank account for your business. There are many fees that retail banks charge for business accounts. However, there are many fees that can impact your business’s finances.
You should aim to find a bank account for your business that charges low fees or none. Most business accounts charge some fees. However, it is difficult to find a business account that does not have these fees. Although fees may not seem excessive at first glance, they can quickly become costly as your business grows and makes more sales.
The most popular fees for business bank accounts include:
- ATM fees: These charges are applied by banks to cash withdrawals (and balance inquiries) at ATMs. These fees can vary from less than $1 to $3 per transaction. This can quickly add up.
- Cash deposit fees: These fees are usually a percentage from the amount that is deposited above the monthly allowance that you agreed to when opening an account. These fees vary depending on the bank and how much was deposited. They can be as low as 1% or as high as 5%, depending on which bank you choose.
- Monthly fees: This is the most important type of bank account fee. This is the amount that the bank will charge each month for you to maintain an active account. While some banks don’t charge monthly fees for business accounts, most do.
- Transaction fees: These fees are similar to cash deposit fees. Banks apply transaction fees to any transaction that exceeds a set number of transactions, usually around 100 transactions per month. Although these charges are usually very low, typically only a few cents per transfer, they can quickly add up like ATM fees.
- Wire transfer fees: Your bank may charge wire transfer fees if you allow customers to pay by wire transfer. These fees are usually calculated as a percentage on the total amount transferred. However, some banks charge flat fees regardless.
If you meet certain requirements, most retail banks will waive some or all of the above fees. This can mean having a minimum balance in your account at all times, agreeing that you will deposit a specific amount each month, and other conditions such as the cash deposit or transaction fees examples above.
Because of their familiarity and convenience, many merchants prefer to use their bank’s personal bank for business banking. If you find a bank account that offers favorable terms, this is a good option.
Debit cards for business
A business debit card is the next product in your business banking portfolio.
It is important to choose a debit or business card when opening a bank account for your business. The two products are closely related. Different accounts offer different types and types of cards. Each account has its own fees, bonus programs, loyalty programs, and terms. Although the details of a debit or credit card shouldn’t discourage you from opening a business bank account, they are important to consider when comparing similar products.
Not every business requires a debit card.
What should you look for when looking at business debit cards
Fees are a major consideration, just like business bank accounts.
You should aim to find a business card that doesn’t charge transaction fees. You may need to pay monthly fees to maintain your business bank accounts. Adding transaction fees to debit card transactions to top off maintenance fees is an added insult.
If you require overdraft protection for your business bank account, check to see if debit card transactions that exceed your agreed-upon withdrawal limit are subject to additional fees. Banks may charge fees and overdraft protection fees. Make sure you carefully read the terms of any cards you are considering.
Security measures, in addition to the fee structure, are also important when selecting a business debit cards.
Avoid cards without chip-and-PIN technology Although these chips are standard across all types of debit cards, some banks still offer business cards without this security feature. This technology is not perfect, but it is significantly more secure than traditional signature verification.
Online banking for business
Online banking is essential, regardless of the type of business account you open.
Online banking is more than a convenience for business owners. Online banking is about being able to respond quickly and confidently to changes in your business environment.
While most credit unions and retail banks offer some online banking capabilities, there are many options. This can make it difficult to choose a bank or account. These are the things to look out for when evaluating bank products.
What should you look for when banking online?
Online banking products may not all be created equal. Before making a decision, it is worth taking the time to review each feature.
When choosing a banking app for business, one of the most important factors to consider is how frequently or quickly a bank updates its app. While some banks’ apps can reflect deposits and withdrawals immediately, others may take up to 24 hours or longer to display accurate account activity.
Unfortunately, few banks will advertise that their app takes too long to update. This means you’ll have to rely heavily on user reviews to assess this aspect of online banking apps. Although user reviews can be found on the Apple App Store and the Google Play Store for Android phones are a great starting point, they may not be accurate. Also, both platforms have paid reviews that could be misleading. Before making any decision, make sure you thoroughly research the app by looking at reviews from multiple sources.
It’s worth looking for a bank that offers more than just balance inquiries online when it comes to the basic functionality of a banking app for business.
It can save you time by allowing online check deposits using your smartphone’s camera. It shouldn’t take you too long to wait in line at the bank to give a clerk a piece paper. Instead, spend that time helping customers. Integrations with contactless payment options such as Apple Pay or Google Pay can make it easier for your business banking. You may also be able to integrate with other accounts at the bank such as a personal checking.
When choosing an online business banking product, security is a key consideration. While your mobile device may have security features built in that will help protect your account data, you should also look into additional security features such as two-factor authentication.
Banking for business that is right for you
It can be difficult to choose the right business banking products because no one knows your business as well as you. This is complicated because many retail banks have a financial interest in keeping the details of their business banking products as transparent as possible.
Before you make any decisions, identify the features and services you require to provide customer service. What one company considers essential might not be necessary for another. Therefore, it is important to look at business banking products from the perspective of your goals and how you plan to grow and run your business.