How to Choose a Business Bank Account: 8 Key Questions

How to choose a business bank account: 8 key questions cover fees, loan options, cash flow limits, customer service, and online security to find the right fit.

by Kaleigh Moore1 Dec 2021 • 7 min read

Choosing a bank that’s right for your business is no small task. No matter if your banking needs are straightforward (like opening up a business checking account) or more complex (like getting a line of credit), finding a bank that fits your needs is crucial.

But with 4,000+ FDIC-insured banks in the US as of 2019, how do you know which bank is the best option for your company?

In this guide, we dive into everything you need to know about choosing the right bank for your business.

Here are eight questions you should ask before choosing a bank:

1. Is the bank small business-friendly?

Many banks specialize in certain types of businesses. It is best to find a bank that’s known for managing the banking needs of companies in your industry.

You can evaluate if a bank is small business-friendly by keeping these questions in mind:

What is the reputation of the bank in the market?
How does the bank handle chargebacks and other business problems?
Has the bank handled a similar type of business account in the past?
Do they offer solutions and financial advice tailored to your industry.

2. What is the fee structure offered by the bank?

All banks charge fees. Evaluating fee structure gets tricky because this information tends to be vague.

Some typical fees banks charge are:

Service fees
ATM fees
Account fees
Management fees
Withdrawal/deposit fees
Inactive account fees
Overage fees
Credit card processing fees

You need to know the amount of each fee and compare rates among different banks. Does your business use ATMs or credit cards frequently? Then you might want to look for a bank that doesn’t overcharge fees in these areas.

Lastly, you don’t want to get caught off guard by hidden fees that may add up over time. Do your due diligence and make sure you account for any potential fees.

3. Are there any perks or incentives offered by the bank?

Ideally, you’d want a bank that offers basic business banking products and services like debit cards, online business banking, cash management services, and more.

But many banks offer much more—like attractive introductory offers or low-interest rates to keep a certain minimum amount in your account always, payroll services, etc.—especially to small business owners as bait to lure the big customers in.

Some conditional perks may be suitable according to your business requirements. For example, the incentive to maintain a certain balance in your account always may be good if your goal is to keep some funds intact.

When choosing a bank, make sure you understand the incentives and the cost you’re paying in exchange for them. In other words, read the fine print.

4. Does the bank have a hassle-free loan process?

You may not need a small business loan right now. But you might need one in the future as your business grows.

If you’re looking to fund your business, it helps if one bank can offer you the loans you’d need since you already have an existing relationship and understand their regulations.

Many banks also specialize in small business administration (SBA) loans with some of the lowest interest rates and longest-term loans. If you plan on applying for a loan, it’s best to search for those specializing in SBA.

Shopify store owners can benefit from merchant cash advances and loans through Shopify Capital. This funding is repaid as a percentage of your store's future sales, making it a simple and hassle-free loan option for many small businesses.

5. What is the bank’s customer service like?

It’s important to choose a bank with a customer service team that is friendly, accommodating, and helpful as you’ll be interacting with them often.

Some questions that can help you evaluate the customer service of a bank:

Is there a 1:1 relationship manager?
What is the turnaround time to receive a reply on queries?
Is there 24/7 support?
What are the hours of operation of the bank?

Remember that customer service also includes things like ATM locations. If there are only a few ATMs in your area, you might end up paying a fee for using another bank’s machine.

6. Does the bank meet your cash flow requirements?

Your bank must meet your cash flow requirements because it can be more important than profit in some cases.

Some banks have a cap on maximum and minimum withdrawal amounts, so it’s critical to evaluate whether that number is sufficient for your business needs. Find the daily, weekly, and monthly transaction limits. You’ll end up paying a hefty fee if you cross them.

For example, if you do 200+ transactions per month, a bank with a limit of 50 transactions per month is not a good fit.

Remember to evaluate this for the future when your business grows; will your bank upgrade its limits?

Ideally, you should find a bank that allows unlimited transactions and has no cap on how much money you can transfer or receive each month.

7. Does the bank integrate with your existing bookkeeping software?

Saving time where you can as a business owner is always a good thing. In fact,

Clutch found that for 72% of small businesses with ten or fewer employees, one person handles both HR and accounting responsibilities.

Thus, the bank you choose should mesh with your regular bookkeeping and accounting tasks without adding stress. It’s crucial that the bank you choose integrates with your accounting software to make your life easier.

8. Does the bank you’re considering have convenient and secure online banking?

Online banking is a necessity in today’s economy. But with the rise of online banking, there’s a rise in cybercrimes, too, especially for small businesses. A whopping 43% of cyber attacks are aimed at small businesses.

When evaluating banks for safety, check what security measures they have in place to prevent cyberattacks and other security risks. Things like two-factor authentication are an excellent way to add another protection layer.

Apart from security, there is the convenience factor. Read app reviews of the bank on App Store and Play Store. But since both platforms aren’t free from false or paid reviews, make sure to do a thorough check.

Take your time (but start early)

Choosing the right bank for your business is a lengthy process. Nobody knows your business goals like you do, which makes choosing the right bank all the more challenging.

But the right bank has a considerable effect on your business. It impacts how smooth your business runs, how easily you can expand, and how convenient it is to manage complicated finances.

Remember to take your time. But the sooner you start, the earlier you set up your business for growth.

How To Choose A Business Bank Account FAQ

Can I use my personal bank account for my business?

Using a personal account for business transactions is possible, but keeping the two separate is generally a smarter long-term move. Personal banks often lack small-business features like low-interest loans or payroll services, and combining accounts makes it harder to track deductible expenses when filing taxes. A dedicated business account simplifies bookkeeping and keeps tax season more straightforward for sole proprietors and growing businesses alike.

Should I choose a small or large bank for my business?

There's no single right answer since it depends on what your business needs most from a banking relationship. Larger banks tend to offer more funding options and business-friendly services but serve a bigger customer base, which can make personalized attention and fast loan approvals harder to get. Smaller banks often provide more tailored support, and businesses can sometimes leverage being a bigger customer to get better service.

Do I need to choose only one bank for my business?

No, using multiple banks makes sense when different institutions meet different needs, such as one offering stronger loan terms and another a better savings rate. Spreading funds across banks also helps build multiple financial track records and adds a layer of security since your money isn't concentrated in one place. The tradeoff is managing more accounts, so weigh that inconvenience against the benefits of splitting your banking relationships.

Do I need a business bank account to sell on Shopify?

While you do not need a business bank account to use Shopify, it is generally recommended to open a business bank account when starting an online business. Waiting until sales pick up is an option, but opening an account early helps separate revenue from personal funds from day one. Prioritize an account with no minimum balance, no monthly fees, and reliable online banking tools built for an ecommerce business.

What documents do I need to open a business bank account?

Employer Identification Number (EIN) or Social Security number if you're a sole proprietor, and a fictitious business name certificate or Doing Business As (DBA) certificate are commonly required to open a business account. You'll also need a valid driver's license or passport to confirm your identity with the bank. Exact requirements vary by bank and business structure, so confirm the checklist with your chosen institution before applying.

by Kaleigh MoorePublished on 1 Dec 2021