Why do you need a business checking account?
Maybe you’re running a side business out of your home and keeping your finances simple. Thing is, there are a lot of reasons why a business checking account makes sense:
- Separate personal and business finances: If your business has expenses and employees, you need to keep accurate records of where all the money is going. You can’t do that if everything is mixed into your personal checking account.
- Simplifies accounting needs: Businesses often have complicated accounting needs that require more than just basic commercial banking services like writing checks or accepting credit card payments. For example, many businesses need foreign currency capabilities, point-of-sale processing, and specialized financial software to help them manage their money effectively.
- Business legal protection: You may be personally liable for something that happens at work, but if you run your company as a separate legal entity, it’s much harder to sue.
- Business tax benefits: You can deduct all of the expenses associated with running your business. If you have a traditional small-business set up with an LLC or corporation, this means you can deduct things like computers, office supplies, even your home internet connection. This way, your business is paying taxes on its profits instead of you paying taxes on your personal income.
- Receive payments: A business checking account allows you to receive payment through direct deposits, check payments, or online transfers that can be accessed online or via an app on any mobile device or tablet. You can also access free online banking services that help you manage your accounts more efficiently, such as bill pay and mobile deposit.
- Fraud protection: Most banks offer monthly statements as well as alerts when any suspicious activity takes place on your account. They also have security features that make it harder for someone to steal your information and commit fraud with it.
- Ease of use: Most business checking accounts are linked electronically to your company’s accounting software. This means that you do not have to visit the bank to deposit checks manually or make withdrawals from an ATM machine. You can easily access your money anytime through online banking.
What do you need to open a business checking account in Illinois?
Opening a business checking account may be an easy process, but it is still important to gather the proper documentation. Here are some things you need to open a business checking account:
- TIN Number: A TIN Number is the Employer Identification Number (EIN) for your business. This will be used in filling out forms and documents with the IRS and Social Security Administration.
- Business Name Registration: You want to make sure you have the proper registration for your business name. This also means that it has been approved by the state you’re filing it in.
- DBA/Fictitious Business Name Filing: There are some businesses that require you to register your fictitious or DBA name with state offices as well. Take care of this immediately after you have registered your business name. If you fail to do so, you might find yourself in legal trouble later on down the road when someone else uses your name without knowing it is trademarked.
- Articles of incorporation (if applicable).
- Business license.
- Copies of your social security cards for you and your partners/owners.
- Articles of incorporation (if applicable).
Common business checking account fees in Illinois
Account fees can vary by institution. Here are some of the most common business checking account fees:
- Overdraft fee: A fee charged if you don’t have enough money in your account or have not set up a line of credit to cover an overdraft situation.
- Deposit items returned (NSF) fee: A charge incurred when a check bounces or a deposit has been made against insufficient funds in the account.
- Monthly service fee: Monthly service fees can range from $5 to $50 per month depending on the institution, but $10 and $15 are often the norm.
- Minimum balance fee: Many institutions require that a minimum balance be maintained in order to waive a monthly service charge or monthly fee. The amount of this required minimum varies greatly from one bank to another.
- ATM fee: The average bank charges about $2 for using an out-of-network ATM for cash withdrawals. However, some institutions do not charge this fee if you use the institution’s own network of ATMs. Check with your bank to find out what their requirements are before assuming that you won’t be charged a fee for using an out-of-network ATM.
- Outgoing wire transfer fee: Wire transfer fees are almost always in addition to any fees charged by the receiving party. These fees can vary between $5 and $35 or more depending on the bank
How to choose the best business checking account in Illinois
Ready to choose the best business checking account? Consider these tips:
- Type of account: Do you want an account that earns interest? Or one that offers other features such as check writing? Whatever it is, make sure that it fits your financial situation.
- Check for fees: Fees can vary widely from one bank to another, so it pays to closely read the fine print on what is included in your monthly fee as well as any potential transaction fees that may apply.
- Convenience: Do you want online access to your account? Do you need more than one branch location? If so, how far are you willing to travel for banking services?
- Technology: Can the bank provide you with all the technology you need? Do they offer a mobile app? Can you link your current accounts, accounting software, or apps to your new account?
- Business hours: Can you access your money from anywhere? Do you need instant access? Or can you wait until morning? Also, check out what happens on public holidays. Can you get cash? Do you get charged for every transaction in a foreign currency?