Business Bank Accounts
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Navigating through the assortment of business bank accounts that are available isn't very difficult once a person has defined their banking needs. For some people a totally free checking account from the local retail bank will be adequate. For others, an interest-bearing account from a commercial bank may be what's needed. So even before choosing an institution, ask a couple simple but important questions. First, how often will deposits be made into the account, and is there a desire to see the money grow over time. Perhaps the nature of the business dictates that money will be deposited and withdrawn from the account often. Second, how do you prefer to do your banking? Traditional banks that a customer walks into and meets face-to-face with another person offer better service than online banking. But they also have limited hours, and come with other hassles such as long wait times. Some traditional banks offer the flexibility of online banking as well. If a problem occurs, a short trip may resolve the situation. Employees become familiar with their customer's needs and habits. This can be comforting when a problem surfaces. So, before deciding on a service, make a list of important issues and needs. Doing this will reduce the worries and anxieties normally associated with banking. Reducing stress is part of God's plan. "And which of you with taking thought can add to his stature on cubit? If ye then be not able to do that thing which is least, why take ye thought for the rest?" (Luke 12:25-26)
The Internal Revenue Service requires that business bank accounts be maintained separately from personal funds. Again, keep in mind what is needed from the account. There are several options available to business owners. Interest-earning checking is available but normally requires more money to open, and sometimes a minimum balance is required to be maintained. Totally-free checking is also available, but they are not always totally free. They require less money to open and maintain. But customers get nailed with higher fees for other services such as endorsement stamps or a box of checks. Investigate free checking services to ensure they meet all the basic needs. Consider an interest-earning savings account, if checking services are not needed. Another option is the Negotiable Order of Withdrawal accounts that are offered by some commercial banks, mutual Savings banks, and savings-and-loan associations. A NOW account is an interest-earning account with which the customer is permitted to write drafts against money held on deposit. However, most for-profit organizations are not permitted to open a NOW account. For-profit entities that are prohibited from opening NOW accounts include corporations, partnerships, associations, and business trusts. The one exception does exist for business owners. Individuals who do business as a sole proprietor under a trade name such can open and maintain a NOW. For example, John Doe doing business as Doe Enterprises can maintain a NOW account.
Large and small business bank accounts are available in a variety of financial institutions. Doing a little research into each type can help a person get the best banking service according to their needs. Basically there are six types of financial institutions available to choose from: retail banks, investment banks, commercial banks, credit unions, online banks, and savings and loans associations. A brief description of each will help owners make an informed decision regarding business bank accounts. Retail Banks work with customers on personal, as well as business, accounts. They are the most common type of financial institution and offer a variety of checking and savings options. Talk to an officer concerning the specifics of each type. Retail banks also offer Certificates of Deposit, safe deposit boxes, mortgages, auto loans, and unsecured and revolving loans. Basically, retail banks are general purpose banks designed for a wide range of customers. Others are more specialized. For example, a commercial bank is designed to serve the needs of businesses. Commercial banks also offer checking and savings business bank accounts. But these types of banks specialize in lending money for real and capital purchases. Other services include lines of credit, lockbox services, payment and transfer processing, and foreign currency exchange services. Investment banks are even more specialized. They assist other organizations that are trying to raise money through issuing stocks and bonds. In other words, investment banks guide other people though the investment markets.
Community bankers provide suitable business bank accounts, too. Credit unions are owned by its members or customers and since they are nonprofit organizations usually stress service over profitability. But credit unions are safe and insured. As a financial institution they are required to make sound banking decisions. Credit unions don't open their doors to everybody. A common bond has to exist. Some allow those who live within a certain radius of the credit union to open accounts. Others restrict membership to a specific workplace, company, or a religion. If physically getting somewhere is an inconvenience, than online banking might be an option. Online banks are used primarily on the internet and offer many of the same services as traditional banks, along with some advantages.
Banking online is flexible. Open and fund an account, transfer money, pay bills, and buy CD's any time day or night on a computer from home or work. Often, online banks offer more competitive rates and debit cards. On the downside, online banking customer service is often not on the same level as traditional banks, and checks clear much slower. There is one final option for business bank accounts. Savings and Loans Associations are specialty banks created to promote affordable home ownership. Depending on the size of a business some of these options may not be appropriate. Shop around and get opinions from others who have already opened accounts. Also banks are permitted to change the terms of business bank accounts with 30 days notice to the customer.
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