Why do you need a business checking account?
Here are some of the benefits of having a business checking account through your financial institution:
- A professional image: A business account will give your company a professional image among its customers and other people. It will also help you in documenting your business transactions which will be helpful while filing tax returns at the end of the year and making changes in your bookkeeping records.
- Protection from fraud: Businesses are less likely to be victims of fraud as compared to individuals who have personal accounts because businesses tend to have better security systems and advanced technology to protect against identity theft and other fraudulent activities.
- Tax deduction: Many people don’t realize that by having a business checking account, they are able to deduct the costs of utilities and various other expenses from their taxes. Although this might not seem like much, it can make quite a bit of difference over time when all is said and done.
- Budgeting tools: Having access to tools that allow you to track how much money is going into and out of your business can help you make better financial decisions. For example, if you get alerts about unusual purchases or withdrawals, you’ll know to investigate where the money is going so you can see if any fraud is being committed.
- Business credit card: If you’re approved for a business credit card through your financial institution, the bank will likely offer perks or incentives that make it worth having one. You might also be able to use the card for purchases and then pay them later.
What do you need to open a business checking account in Louisiana?
To open a business checking account in Louisiana, you need to:
- Provide the company’s federal employer identification number (EIN) to the bank. The EIN is issued by the Internal Revenue Service. It’s unique to your company, and you must include it on all tax returns that you file. It should also be used for all correspondence with the IRS.
- Provide proof of identification. Bring a passport, driver’s license, or state-issued identification card.
- If your company is set up as an LLC, you’ll also have to provide articles of incorporation showing you’re a member of a single-owner LLC or have filed with your secretary of state as a foreign LLC taxable in Louisiana.
- Proof of your company’s identity
- Verification of your company’s address
- The names of the people authorized to access the account on behalf of your company, known as signatories
Common business checking account fees in Louisiana
- Minimum balance fee: If you don’t meet the minimum balance requirement each month, your bank may charge you a fee to use its services. Some banks charge a flat fee while others impose a percentage of your balance. In some cases, if your balance drops below the minimum required level, you may be charged an inactivity fee.
- Monthly maintenance fee: Many banks require you to pay a monthly maintenance fee for using their services. This is typically $15 or more per month for personal business checking accounts, although some banks waive this as long as you maintain a minimum balance or set up direct deposit with your employer or government agency.
- Overdraft protection fee: Your bank may offer overdraft protection, where it pays your bills if there isn’t enough money in your account to cover them. Most banks charge a monthly or per-transaction fee for this service, which gets added to your bank fees total each month.
- Paper statement fee: A monthly paper statement may be convenient, but it can also be costly. A lot of banks will charge between $5 and $10 per month just for the privilege of receiving a paper statement in the mail.
- ATM fee: When using an out-of-network ATM, many banks will charge a fee for each transaction.
- Service Charges: Depending on the type of bank that you choose, they may require additional charges for specific services such as checks, cashier’s checks, and wire transfers. These charges are typically disclosed in the bank’s terms and conditions but it’s always good to know what they are before signing up for a business checking account.
How to choose the best business checking account in Louisiana
Here are some things for you to think about if you’re thinking about opening a business checking account:
- Set-up Fees: It’s important to choose an account that doesn’t have any setup fees. If you’re like most small businesses, you don’t have a lot of extra money lying around for fees. The last thing you want is to pay for something you don’t need.
- Minimum balance: If you’re going to bother having a business checking account, you’ll want to make sure it has enough room to handle your cash flow needs. You should also look for an account that doesn’t charge fees if you don’t have the minimum balance required. Be sure that any fees are spelled out in the fine print of your contract so there are no surprises later on.
- Fees: Fees are almost always a fact of life with bank accounts, but they can be sneaky and hard to find on many businesses ’ checking accounts. One type of fee that’s common with business checking is an insufficient funds fee, which is charged when money isn’t available in the account to cover a transaction. Try and find a bank that has fewer fees.
- Interest Rates: Although we wouldn’t recommend keeping a large amount of cash in your business checking account, some interest rate is better than none at all.
- Type of account: The type of account you choose will depend on your business’ needs. Some businesses prefer the flexibility and ease of writing checks, while others prefer the convenience of electronic payments and direct deposits. If you have multiple locations, you may also want to consider an online bank so that employees can access their funds from any computer with internet access.