Why do you need a business checking account?
A business checking account is also a good way to keep track of all your business finances. Here are some other reasons why you need a business checking account:
- Tax Deduction: If you run your own company, having separate accounts will help keep taxes easier, especially if you’re running multiple businesses. Also, any expenses that are related to the company can be deducted from the income when tax time rolls around.
- Quality of service: When you have a business checking account, you can rest easy and enjoy greater security knowing that the bank is committed to keeping your money safe.
- Convenience at ATMs: Business checking accounts offer greater convenience when it comes to using ATMs in the case that one is not available near your location. Instead of going out of your way, you can visit another ATM that is affiliated with your bank.
- Discipline: Having a checking account for your business helps to keep you disciplined with money management. You will have to record every expense and maintain receipts for tax purposes.
- Business Growth: A personal checking account should be used only for personal use and not for the running of a business. Having a separate checking account for the company gives you plenty of room to grow as a business without worrying about any overdraft fees or penalties for bouncing checks.
What do you need to open a business checking account in Kentucky?
Trying to open a checking account without the proper documentation can be frustrating and time-consuming. Below are common requirements for opening a business checking account in Kentucky:
- For businesses that are just starting out, many banks will require a Certificate of Incorporation or a Business Registration Certificate from your state.
- Tax Identification Number or TIN number. This number usually starts with an “EIN” which stands for Employer Identification Number. This number is used to identify the business when doing taxes and other government documents.
- Have a copy of your Articles of Incorporation or LLC
- If opening a personal or general partnership account, you will need to provide the name and address of each person on the account
- The bank will also want to know the type of business you are starting and what you plan to do with the checking account
Common business checking account fees in Kentucky
Details of the fees imposed vary by bank, so it’s important to take these into consideration before you choose an account. Common fees found on business checking accounts in Kentucky include:
- Statement fee: Although it’s rare, some banks charge you for having access to paper copies of your bank statements.
- Monthly maintenance fee: Many businesses end up paying a monthly fee whether they need it or not. This can be because they don’t keep a large enough balance in their account or because they receive too many deposits throughout the month.
- Minimum balance fee: This is charged by some banks if your balance falls below a certain amount at any point during the month. The minimum balance will vary depending on the bank, but it’s typically $500 to $5,000.
- Inactivity fee: This fee is charged for accounts that have no activity for a specified period of time, typically 90 days or more. An inactivity fee is also sometimes referred to as a “dormant” or “inactivity” charge.
- ATM usage fees: Even though many merchant service providers offer free ATM access to their customers, some banks still charge their business customers for using ATMs that aren’t owned by the bank that issued their debit card. These charges typically cost around $2 per transaction and will vary by location as well as by bank.
- Checks returned for Non-Sufficient Funds (NSF): Issued when your bank account does not have enough money in it to cover a transaction. It will automatically deduct the original amount of the check and any fees charged to you by the business on which you wrote your check.
- Service charges: This charge is a flat rate based upon the amount of activity you have on your account, such as the number of checks written or deposited, number of deposits made and other services used. The fee depends on the size of your deposit and the type of service you use.
How to choose the best business checking account in Kentucky
Before choosing a bank account, consider the following factors:
- Cost: Some businesses might not even notice the cost of an account. For example, if they have only one employee and they don’t use many features, they might not feel the cost is that high. However, businesses that are growing rapidly or have a lot of employees might find themselves paying a lot in fees. If you do see a large number of fees in your bill each month, consider looking for an account with fewer fees.
- Account minimums: Some banks require businesses to have several thousand dollars in their accounts before they can open them. This requirement can be difficult for new businesses trying to get started. Look for a bank that doesn’t have these requirements so you can get started right away.
- ATM access: Some banks allow customers to use any ATM in the country while others restrict the number of withdrawals per month or charge extra fees if you go over that number. You should look for an account that allows you to withdraw money without additional charges or limits so you aren’t hit with fees just because your business requires frequent cash flow.
- Online Banking and Bill Pay: Does the bank offer online banking and bill pay? This is essential to keeping everything organized and simple. Some banks may offer mobile apps as well, which can make accessing your account easier.
- Types of transactions you will be making: If you make frequent cash withdrawals or need checks, choose a checking account that can accommodate these activities without charging additional fees. For example, if you use your debit card often and want it linked to an online payment system, then prioritize a debit card over checks with the provider.