Each startup has its unique financial needs which can evolve over time. Selecting the right business checking account can ensure that your startup has access to services and products that are vital for accelerated future growth. We reviewed the top options based on their features, fees, and overall quality.
Relay offers a simple two-tier pricing plan. You can get started with no monthly fees and no account minimums. When you upgrade to the Pro plan, you’ll benefit from additional features such as free domestic and international wire transfers, or the ability to auto-import bills from QuickBooks and Xero.
Bluevine business checking comes with no monthly fees. Plus, the account provides an impressive list of benefits such as integration with online business tools, sub-accounts to help you manage your finances, and two free checkbooks.
Chase Business Complete Checking comes with Chase QuickAccept which allows card payments to be processed on your mobile device, so you receive deposits the same day to help manage cash flow within your business.
What we like
In person customer support (except Alaska & Hawaii)
Axos Bank business interest checking account earns a competitive rate for cash held within the account, and you'll get your $10 monthly fee waived by holding a minimum balance of $5,000. If you keep a decent amount of cash in your account, this could be an ideal account.
Lili’s business checking account comes with features that help users keep their banking costs low, optimize their taxes, and manage their business’s finances.
Novo allows easy integration with third-party accounting software, including Quickbooks and Xero. You can also link your Novo debit card to your Google Pay or Apple Pay Wallet. Novo also syncs with your Stripe processing account and easily integrates with Slack to get automated updates on your bank account.
If you are looking for a business checking account that is easy to use and with almost no fees, you might want to consider Novo. The bank account is also accessible in the app store for both iOS and Android devices.
What we like
Free ACH transfers, mailed checks, and incoming wires
NorthOne helps you manage your finances with its invoicing app, budgeting tool by creating an unlimited number of sub-accounts with the envelope functionality, and integrating with a suite of business tools and software.
What we like
Budgeting tool to help manage your finances
Smart integrations with business tools
Send invoices from the app
Low minimum deposit
No hidden fees
Unlimited transactions with no fee
What we don't
$10 monthly fee
No in persona customer support
What is a business checking account for startups?
A business checking account for a startup provides a separate bank account that keeps your personal and business finances separate. Mixing personal and business money can lead to tax and legal liabilities, so it’s important to maintain a clear legal distinction to protect personal assets in the event of a lawsuit. Â
You can use a business checking account for day-to-day transactions such as paying vendors and making purchases, as well as making deposits and withdrawals. Additional perks that startups can receive include minimal monthly fees, integration with accounting software, integration with payment processors, low transactions fees, and the ability to secure a credit line.
These features can help streamline and automate your business finances and processes, leaving you more time to invest in your business growth. Plus having an established relationship with a financial institution can give you access to a wider range of financial products.
Do startups need a business checking account?
Entrepreneurs should consider opening a business checking account for their startup. Once your business is incorporated, opening a business checking account will ensure the separation of personal and business finances.Â
What are the pros and cons of a business checking account for startups?
There are many pros and cons of opening a business checking account for startups. Before you sign up for an account, you’ll want to review the services and products offered by the bank. Here are a few things for you to consider before applying:
Pros
Financial products and services: Growing a startup business requires capital and access to financing, especially during the early stages where cash flow may be unsteady. Opening a business checking account can help your startup establish credit lines and other financial services that help fund capital requirements.
Tax reporting: It can be a time-intensive task to separate business expenses in a personal bank account for tax reporting purposes. A business bank account will simplify the process and help you keep track of business expenses a lot more easily.
Risk of closure: If a bank finds out that you are operating a business out of a personal bank account, they may close the account. Therefore, it’s important to open the correct account from the start.
Liability protection: To be respected as a separate entity in the event of a lawsuit, it’s important to operate the business independently of personal finances. Having a separate bank account provides liability protection where creditors are not able to go after personal assets if you default.
Professionalism: A business bank account adds professionalism and creditability, which can build trust with your customers. Plus, you will be able to accept several forms of payment types including credit and debit card payments.
Cons
Fees and minimum balance: Some business checking accounts can have large fees and high minimum balance requirements. If you’re just starting out, it can be difficult to meet these requirements, increasing the cost of operating your business checking account.
Transaction limits: Banks can place transaction limits on accounts. Typically, you have a set number of fee-free transactions per month. If you exceed this limit, you will be charged a small fee for each transaction over the limit.
Low interest on balances: Many banks offer a low-interest rate or zero interest on the minimum balance held in your account. If your bank has a high minimum balance requirement, you could lose out on interest that can be earned from your cash.
What are the fees for a business checking account for startups?
When researching business checking accounts for startups, it’s important to consider the fees imposed and how they might affect you. Fees can quickly add up and you’ll want to keep a close eye on what you are being charged. Here are a few fees for you to consider when looking into an account for your business:
Monthly maintenance fees: This is the fee banks charge to operate your account and it is typically deducted from your account balance each month. Look out for business checking accounts that have a low monthly fee or a fee that can be waived if certain criteria are met. Some online banks have zero monthly fees.
Transaction fees: Smaller fees can quickly add up and eat into your profits, especially if you’re bootstrapping at the beginning. Transaction fees require you to pay a small fee each time there is a transaction in your account. It’s a good idea to look for an account that has a high transaction limit or waives all transaction fees.
Minimum balance: Be mindful of the minimum balance requirements. If you fall under the requirement, you could be charged additional fees.
Overdraft fees: If your bank has an overdraft facility, you could be charged a fee for making a payment that exceeds your available funds.
ATM fees: Banks may have fees for using out-of-network ATMs. Look out for reimbursement of ATM fees if you plan on making frequent cash withdrawals for your business.
Cash deposit fees: Many banks have a cash deposit limit where if your cash deposits exceed the number of pre-determined fee-free transactions, you will be charged a small fee.
In addition, there may be fees for paper statements, foreign transaction fees, stop payments, and wire transfer fees. As fees can add up over time, consider the costs involved when opening your business checking account to avoid overpaying for services you do not require.Â
What are the alternatives to a business checking account for startups?
If your startup has benefited from a large investment or injection of capital, you may want to consider a business savings account. Many business checking accounts offer low-interest rates, and a savings account can be a better option for earning interest. High-yield business savings accounts typically offer a yield above the national average.
You can use your savings account to put away money for an emergency fund, prepare for a major purchase, or fuel an expansion. When opening a business savings account, you should consider the account fees, balance requirements, and withdrawal or transfer limits, to ensure that it is the right option for your business.
Alternatively, if your business takes a high number of credit and debit card payments, you may want to consider opening a merchant account. With online payments becoming the norm, these accounts can help you increase sales, improve cash flow and give your customers the flexibility to purchase in different ways. Plus, a merchant account can help you streamline how your business handles transactions and keep your finances better organized.
How to choose a business checking account for startups
Finding the right business checking account for your startup can be a time-intensive task. Each startup has unique requirements and choosing the right bank can support and grow your business over time. Here are some key factors to consider before you choose an account provider:
Tools and services: The best business checking accounts will provide additional services and tools to help streamline your business finances. Look out for mobile banking, mobile check deposits, accounting integrations, business credit cards, invoicing software, and other third-party integrations that would be useful for your startup.Â
Type of bank: Consider whether the financial institution you’re looking to open an account with is local, regional, national, or online. The process for opening an account can be faster online, but a bank with branch access can help you build a long-term relationship that could give you access to a wider range of financial products.Â
Evaluate your needs: As your startup grows, so might the financial needs of your business. Don’t be afraid of reevaluating your business’s financial needs and switching providers if required.Â
Bundled services: If you sign up for a business checking account and other services such as a business credit card, you may be eligible for discounts.Â
Interest on balances: Some business checking accounts offer interest on minimum balances. This can help you offset any fees that are charged by the bank.Â
FDIC-insured: The Federal Deposit Insurance Corporation (FDIC) is an independent agency that protects customer deposits if and when a bank or financial institution fails. Before applying for a business checking account, it’s important to double-check that your bank is insured by the FDIC to ensure the safety and security of your deposits.Â
