This article is part of a larger series on Business Banking.
There’s no such thing as one-size-fits-all when it comes to business banking. Whether you’re opening your first business bank account or changing business banks, you need to evaluate your business goals and needs, identify which banking features matter most to you, and determine which type of bank can best provide them. The steps we’ve listed below can help you narrow down your options.
Step 1: Evaluate Your Business Needs
Identifying your banking needs and goals, depending on how your business operates, can help you narrow down the features you’re most looking for in a business bank. Here are a few examples:
- Cash-reliant businesses typically need access to in-person banking and support for cash deposits
- Sole proprietorships and contractors could benefit from account integrations and tech tools that reduce manual workload
- Businesses with international clients may benefit from low fees on international wire transfers
Step 2: Identify Important Factors
After you’ve evaluated your business’s needs, identify which business banking features can help accommodate your situation and goals. The factors that will most affect your business banking experience include banking products and services offered, network size and availability, fees, interest rates, account scalability, reliability of digital banking platforms, industry experience, and account integrations.
Financial Products & Services
Find out the types of bank accounts and loan options being offered by the bank. While some banks have multiple account options for businesses, many providers—especially digital-only providers—don’t offer a complete range of business banking products. If you’d rather keep all your banking transactions in one bank, you need to ensure that the bank offers all the products and services that you may need, including:
- Business checking accounts
- Business savings accounts (including money market accounts and certificates of deposit)
- Business loan options
- Business insurance
- Commercial real estate financing
Network Size & Availability
When selecting a bank, consider the number of available branches and ATM networks. If you travel frequently but still need in-person branch banking, choose a bank that has several branches and a large ATM network across the country. Chase, Bank of America, and Wells Fargo are examples of banks with nationwide reach.
However, if you don’t intend on doing banking activity outside your area of operation, a community-focused regional bank or credit union may cater to your needs better. If you’re OK with doing your banking transactions online, it might be better to choose an online bank over a traditional bank.
Most business banks charge account fees and service fees. Typical business banking fees those for
- Monthly account maintenance
- Excess transaction
- Cash deposit
- Wire transfer
- Out-of-network ATM transaction
It’s best to choose a bank that charges fewer fees for the services your business uses regularly. A cash-reliant business, for example, should choose a bank with higher cash deposit limits, such as Bank of America. A business that makes regular wire transfers should select a provider with low wire transfer fees, such as Relay.
If you want to get the most out of your deposits, it’s best to go with a bank that offers high interest rates. Most business savings accounts earn interest, but if you want to grow your working capital, many providers—such as Bluevine, Grasshopper, and First Internet Bank—have also begun to offer interest-earning business checking options.
Online & Mobile Banking Experience
If you want the freedom to conduct your banking transactions from anywhere, look for a bank with a good digital banking platform. Most of today’s providers offer digital banking for browsers and mobile devices. Reliable digital banking platforms should let you view your business activity, complete financial transactions online, and reach customer service easily—all in a secure environment.
Common digital banking features include
- Mobile check deposit
- Fund transfers
- Bill pay management
- Card management
- Two-factor authentication
- Online customer support
Scalability & Support for Future Needs
Many banks provide tiered business checking and business savings account options that scale to accommodate higher transaction volumes. Though higher-tier accounts tend to charge higher monthly service fees, they provide higher limits for fee-free transactions and cash deposits.
If you plan on expanding your business, then it’s best to go with a bank that offers tiered checking or savings accounts. Additionally, if you need funding for the future, you’ll want to look for a bank that provides a variety of business loan options.
Many banks have specific experience in different industries. If a bank specializes in your industry, that means it offers products and services that can directly meet your needs. For example, if you’re in a real estate business, you may want to work with one of the best banks for real estate investors because they offer account options and investment property loans that make managing real estate finances easier.
If software and payment services integration is a priority, you should ensure that you can integrate your software seamlessly with the bank’s platform. Having account integrations makes it easier to consolidate your business operations with your banking activity.
The best business banks offer app integration with a variety of accounting software, payment software, and other business tools. Integrations with accounting software, for example, let you sync banking data with bookkeeping ledgers, which removes the load of manual data entry.
Step 3: Understand the Different Types of Banks
Once you’ve narrowed down the features you most need in a business bank, identify which type of bank offers these features. Types of banks include traditional banks, online-only banks, and credit unions.
Traditional banks usually have several branch locations available and offer a full array of business banking products, including business checking accounts, credit cards, business loans, and mobile banking. Some operate nationally while others limit their service area to specific communities or regions.
Regional banks charge lower fees but have fewer branches. However, because they’re limited to specific service areas, they know local market conditions intimately and offer banking services designed for local needs.
Traditional Banking Is a Good Fit If You …
Traditional Banks Are Not a Good Fit If
Work with cash regularly and need support for cash deposits
Prioritize banking with minimal fees
Prefer banking in person
Prefer the convenience of online banking
Require a full range of banking services, including business checking, business savings, lending products, and cards
Online-only banks and banking solutions are a great fit for business owners that want to save on fees and don’t mind conducting all banking transactions online. With no brick-and-mortar banking locations, they lack support for features like cash deposits. Some online banks offer limited cash deposits through third-party businesses; however, this usually takes more time to process and often has associated costs.
Because these providers get to save on expenses like rent and utilities for physical branches, online-only banks, and banking solutions can offer their customers lower fees, higher interest rates, and cost-saving features like discounts and cash back. Most digital banks let customers open accounts online for free with no opening deposit. However, unlike traditional banks, many online banking solutions lack banking services beyond business checking and savings.
Online-Only Banking Is a Good Fit If You …
Online-Only Banks Are Not a Good Fit If You …
Want to bank with minimal fees
Work with cash regularly
Are looking for cost-saving features, such as high-yield annual percentage yield (APY), cash back, and discounts
Prefer in-person banking
Want to streamline banking with tech solutions and integrations
Need a full selection of banking services
Credit unions are nonprofit organizations that have members instead of customers. Often, credit unions are smaller than traditional banks, and they cater to members that meet specific membership criteria, like location requirements or company affiliations. However, the majority of today’s credit unions will let you acquire membership by simply paying a small donation fee.
Like regional banks, credit unions tend to have a better understanding of local market conditions and thus have products specifically tailored to the needs of businesses in their service area. One of the main reasons to choose a credit union over a bank is that these organizations have strong reputations for intimate banking and often offer better interest rates, lower fees, and easier access to business lending over traditional banks.
Credit Union Banking Is a Good Fit If You …
Credit Unions Are Not a Good Fit If You …
Want lower fees
Want nationwide branch access
Prefer banking solutions that are designed for people in your community
Prioritize easier access to financing options
Step 4: Open an Account With Your New Bank
After you’ve evaluated your options, you can open your bank account with the provider that best suits your business. Typically, banks will ask you to prepare your personal and business documents, including identification, business license, and articles of organization. If you are opening a joint bank business bank account, your bank will also request these documents from your partners. Some banks allow you to open an account online, while others require you to visit a branch.
Refer to our guide on how to open a business bank account for the steps you need to take and a checklist of required documents per business type.
Best Banks to Choose for Your Small Business
The best banks for small businesses offer a variety of accounts and loan options for business, along with other perks and services that focus on business banking. Working with one bank that can meet all your business’s needs provides more convenience than opening several accounts with multiple banks.
We’ve evaluated a number of traditional banks, online banks, and credit unions to help you choose the best institution for your needs.
- Best Banks for Startups
- Best Banks for Nonprofits
- Best Bank Accounts for Self-employed Professionals
- Best Banks for Real Estate Investors
- Best Online Business Banks
- Best Credit Unions for Small Business
- Best Free Business Checking Accounts
- Best Business Checking Accounts for limited liability companies (LLCs)
- Best Online Business Checking Accounts
- Best Small Business Checking Accounts
- Best Business Savings Accounts
Can I Use a Personal Bank for My Business?
Most banks offer both personal and business banking products and services. However, you shouldn’t use a personal bank account for business banking because it can create accounting conflicts and cause issues with the IRS. Opening a business bank account allows you to keep business and personal finances separate, which is essential if you want to build business credit, keep your business accounting seamless, and avoid tax issues.
Before you open a business bank account, do proper research first and consider several important factors, including account and loan options available, accessibility, customer service, earning potential, and fees. The best bank is the one that can meet your business banking needs at the lowest cost.