Why do you need a business checking account?
While it’s true that you can use your personal checking account for many of your business expenses, a business checking account is still important for several reasons:
- Tax Deduction: The IRS allows a business that operates as a sole proprietorship to deduct many of its operating expenses from taxable income. These include items like a home office, vehicle and travel expenses, supplies, and other business-related costs. Some of these can also be deducted from your personal tax return if you operate your business as a corporation or LLC.
- Insurance Coverage: Most commercial insurance policies require businesses to use a bank account dedicated only to their business activities. If you use your personal account to deposit checks made payable to the business, then you won’t qualify for this type of coverage.
- Accountability: Keeping track of money coming into and going out of your business is easier when it’s all on one statement. It’s much more difficult when you’re trying to reconcile several accounts in several different banks, along with credit card statements and receipts.
- Easy Deposits: With a business checking account, all of your company’s payments can be deposited directly into one single place—your bank. Not only does this help keep everything organized and easy to access, but it also ensures that you don’t lose track of any payments or receipts.
- Security: Having a dedicated business checking account provides you with more security over your money than using personal checking accounts. The money in your business checking account is strictly for business and isn’t tied up into personal accounts that can be used on anything.
What do you need to open a business checking account in Kansas?
Before you can open a business checking account in Kansas you need to provide information like your legal name, address, phone number, and business type. You will need to bring a few items with you like the following:
- The legal name of the company
- Address of the company
- Social Security Number for each person authorized to sign on the account
- Valid state-issued photo ID for each person authorized on the account.
- Federal Employer Identification Number (EIN). This is a unique number assigned by the IRS for tax reporting purposes that let businesses report earnings for employees and taxes withheld for federal income tax purposes.
- Copy of articles of incorporation
Common business checking account fees in Kansas
Business checking accounts come with a variety of fees, but you will find the most common ones below:
- Teller fee: If you visit your bank branch in person instead of going through online banking, which most people do these days, you could be charged a teller fee. These charges can vary based on your bank and location; some banks charge more than others.
- Monthly service fee: This is the most common type of fee associated with business checking accounts. Some banks charge a flat monthly fee for each account, while others charge per employee or per branch. The fee will be disclosed during the application process, so you’ll know what you’re getting into before you open your account.
- Stop payment fee: If you need to prevent an automatic payment from being processed through your account, there will be a fee associated with issuing the stop payment order on your account.
- Account research/statement copy fee: If you need information from your business checking account, it’s going to cost you. Most banks charge $10 or more for each statement or an itemized list of transactions requested from the account.
- Minimum balance fee: These fees apply if you don’t keep a certain amount of money on deposit at a minimum. This is becoming less common as banks try to attract customers.
- ATM withdrawal fee: If you often withdraw cash from an ATM outside the network your bank belongs to, expect to pay more than $2 per withdrawal — usually $3 or more.
- Overdraft fees: If you’re not careful about tracking your account balance and overdrawing your account, expect to pay hefty overdraft fees as well as interest charges.
- Account set-up fee: If you’re opening an account for the first time with a particular company, there may be a fee associated with that. This is often waived if you keep a minimum balance in the account or make regular deposits into the account every couple of months.
How to choose the best business checking account in Kansas
Choosing the right checking account can be a big decision. More than just making sure your business is able to have enough funds to pay bills and employees, it’s also important to make sure your business’s funds are protected. When choosing a business checking account, there are some things to consider:
- Free checking account: Some banks offer free checking accounts that attract customers who have low balances or make very few transactions. These accounts often have strict rules regarding minimum balance amounts, monthly fees and charges, and a maximum number of transactions allowed per month.
- Free online banking: Many banks now provide free online access to your account information, which can be extremely helpful for managing your money from any location at any time. Mobile apps for iPhone and Android phones also provide quick access to your banking information when you’re on the go.
- Rates: Make sure to look at the annual percentage rate (APR) and monthly maintenance fees because these two factors will affect your bottom line more than anything else. Typically, high rates mean high fees; however, it’s not uncommon for smaller banks or credit unions to offer cheaper rates without charging higher fees.
- Teller Services: Does the bank provide teller services? If so, how much are they charging for them? Teller services may be convenient, but they can become expensive if you use them frequently.
- Overdraft Protection: Do they offer overdraft protection? The cost to maintain overdraft protection can be high. Some banks charge a monthly fee even if you never use it. If you decide to use this service, ask about the fees involved and how often you can overdraw your account before a fee is charged.
- Online Statements: Are the statements available online or do you need to physically go into the bank to get them? Having them online is much more convenient because you can view your account balance at any time, from anywhere.