How To Change Business Bank Accounts (And When to Switch)
Tricia has nearly two decades of experience in commercial and federal government lending. Her expertise is highlighted throughout small business loan content on Fit Small Business.
Ricci Recto has two years of writing experience creating digital marketing content for finance clients. She specializes in business banking.
This article is part of a larger series on Business Banking.
Changing business bank accounts can be a tedious process. Not only do you need to conduct thorough research, but you would also need to assess your business needs, prepare required documents, and update automatic payments.
However, as your business grows, your banking needs are likely to change. Examples of reasons to switch bank accounts include:
- Your account costs are too high
- The account’s limits are too restrictive
- The provider lacks the products you need
- You’re unsatisfied with customer service
If you find that one or more of the above applies to you, the steps below can help you make the switch.
Step 1: Identify Your Business Banking Needs
Changes in business needs are the biggest reasons businesses consider switching business bank accounts. Identify your current business needs and future business goals to determine which banking features you need most.
For example, an e-commerce business looking to set up a physical store that accepts cash would need to find a provider that supports cash withdrawals and deposits. A business that deals with international suppliers, contractors, or clients frequently might need a bank with affordable international wire transfer fees.
Step 2: Research New Bank Account Options
Once you’ve identified your banking needs, it’s time to choose a small business bank that can help you meet those needs. The following factors can help you evaluate your options:
- Financial products: If you want to keep all your banking activity in one place, choose a bank that offers all the products you need. Commonly available business banking products include checking accounts, business savings accounts, and business lending products. Some banks also offer insurance and investment.
- Network size and availability: Determine how much in-person banking support you need. An online provider will suffice if you don’t need in-person customer service or cash transactions. If you want a provider that’s attuned to local market needs, choose a credit union, community bank, or regional bank. If you want nationwide branch options, choose a national bank.
- Fees and rates: Assess your business’s ability to pay for banking fees. Smaller earners are better suited to digital-only providers, which typically charge no fees for account maintenance and day-to-day transactions. Higher earners may be able to afford accounts with traditional banks, which typically let customers waive monthly fees by meeting specific activity or minimum balance requirements.
- Scalability: If you intend to expand your business, make sure your bank of choice can accommodate growth. Many banks offer tiered business checking and savings accounts that scale to cater to higher transaction volume.
Top Business Bank Accounts
The best bank for your small business is whichever provider can meet your needs at the lowest cost. Here are a few options to consider:
Bank | Best for |
|---|---|
Full-service traditional banking | |
Low cash deposit fees and ongoing rewards | |
Full-service digital banking with business checking, savings, and lending products | |
Earning interest on business checking balances |
Step 3: Take Note of Any Automatic Payments
In preparation for applying for a new bank account and closing your old one, make sure to take note of any automatic payments you have previously set up. Don’t close your old account before these payments are posted to ensure that you won’t be in trouble with your suppliers. Additionally, make a list of all your automatic payments. You can transfer these transactions to your new account once you open it.
Step 4: Choose & Apply for a New Business Bank Account
Once you have chosen which bank account will work best for your business, it’s now time to open a new bank account. The process for applying for a new business bank account typically is the same as when you applied for your old bank account. However, this may vary depending on the bank.
Check if there’s an option for an online application or if you’ll need to go to a physical branch to process the account opening. Either way, make sure to gather all the necessary information. The information business banks typically require applicants to submit include:
- Government-issued ID, such as a passport or driver’s license
- Employer identification number (EIN)
- Business documents, such as articles of incorporation, articles of organization, and business licenses
You can also check out our guide to opening a business bank account, which includes a downloadable checklist of commonly required documents by business structure.
After opening your account, check your online and mobile access, debit cards, ATM access, and funds transfer capability. You want to make sure that everything is working correctly.
Step 5: Update Any Automatic Payments
Once everything is up and running with your new business bank account, don’t forget to set up your automatic payment transactions. Check the list that you have created from step three and make sure that you don’t leave anything out. Update your automatic payments as necessary to ensure that you don’t miss any deadlines.
Ask your new bank if it offers a “switch kit,” which refers to a service that helps businesses change bank accounts seamlessly. With this kit, the bank will notify any service providers and suppliers who do business with you when you transfer any automatic transactions. Some banks have an account transfer form that you can send to your suppliers, service providers, or customers to notify them that you have changed to a new bank account.
Step 6: Close Your Old Bank Account
When you’re certain that your new bank account is set up completely and working properly, all automatic payments have been transferred, and all physical checks drawn on your old account have cleared, you may now close your old bank account. In most cases, closing a business account needs to be done in person.
Your bank will most likely ask you to fill out certain forms for account closure. If there are any pending transactions, make sure that you have enough balance in your account to cover them. The bank will release the remaining funds to you or your business’s authorized representative after all pending transactions are processed.
Signs You Need to Switch Business Bank Accounts
Switching business bank accounts requires a lot of time, effort, and research. Before investing time in the process, determine whether the change is necessary.
Here are the top five signs you need to switch business bank accounts.
1. Your Account Costs Are Too High
Most bank products and services have corresponding fees. It’s important to consider your monthly and annual costs in maintaining your bank account. Fees for account maintenance, excess transactions, account inactivity, paper statements, ATM withdrawals, cash deposits, and other extra charges can add up and can greatly affect your business’s finances. If you think you’re paying too much to keep your account, that means it’s time to find other, cheaper options.
2. Your Bank Doesn’t Meet Your Needs
Most bank accounts have certain restrictions, such as the number of free transactions in a month, whether you’re allowed to deposit cash, or the number of deposits you’re allowed to make. These restrictions may become an obstacle to your business’s growth.
Additionally, you may have needs that your current bank doesn’t offer, such as overdraft protection, business software integration, or other services that are important to your business transactions. If your current bank cannot meet your growing needs, it’s a sign that you should find a new one.
3. You Want to Bank Completely Online
If your business has outgrown the traditional banking system and you now prefer to bank completely online, it’s another signal that you need to switch to an online-only business bank account. Perhaps you’ve become too busy to visit a physical branch to process your banking transactions, or you travel too often and still want to access your bank account. If you want to bank anytime and anywhere, switching to a digital bank can simplify your banking experience.
4. You’re Unsatisfied With the Service
Another good reason to switch to a different bank is if you’re unsatisfied with your current bank’s customer service. If a provider’s customer service staff fails to meet your concerns or build a good banking relationship with you, it’s best to take your business where you can get better service and value for your money.
5. You Need Access to More Business Products
Limited access to the products your business needs will inevitably restrict your business growth. If you need to access other business products that your current bank doesn’t offer, such as loan products, credit cards, and merchant services, it’s a good idea to switch to another bank that can cater to your needs.
Bottom Line
When choosing a business bank account, it’s important to consider its scalability with your future needs as your business grows. If your current bank account can no longer meet your needs, or if you experience one of the signs mentioned above, changing banks may be the best way to go.
