Why do you need a business checking account?
Because business and personal bank accounts are different in many ways, here are some reasons why you need a business checking account:
Separate personal and business finances: There are many reasons why you need a business checking accounts. One reason is the need to separate personal and business finances in order to manage your finances effectively. You also want to avoid any tax implications that come with the company’s finances. Additionally, business checking accounts can help you avoid overdrafting for your personal account because it is something that isn’t available in the business account.
Track Business Expenses: A good business checking account will allow you to keep track of business expenses and provide supporting documentation when tax time comes around.
Business Tax Payments: When your business has tax payments due, it is best to keep these funds in an account dedicated to this purpose instead of using a personal checking account. Doing so can prevent late fees from being charged on the payment.
Easy To Access Funds: Having an online business checking account is a convenient way to access funds as needed without running out to the bank every day or two. This can be especially important for businesses that operate primarily on weekdays only.
Cash management: Having your own business checking account gives you full control over all your cash flow. This is important because as your profits increase, you will want to know exactly how much cash you have in hand at any given time. Having an affordable and reliable business checking account means that these funds will be properly managed when running your business.
Protection from fraud: Someone using your credit or debit card without your permission is not a criminal act, so you may not be covered by the bank’s fraud protection policies. In contrast, fraudulent use of your company’s checks or credit cards may be covered under the company’s separate account policy.
What do you need to open a business checking account in North Carolina?
When it comes to opening a business checking account, most banks will require you to provide:
- Personal identification: Driver’s license, state ID, passport, or birth certificate
- Proof of address: Utility bill from within the last 30 days
- Bank statement: Bank statement from within the last 30 days
- A copy of your business certificate. Also called a charter or incorporation paper, this is a legal document establishing your company.
- A business tax ID number, like an Employer Identification Number (EIN) from the Internal Revenue Service (IRS)
Common business checking account fees in North Carolina
Here are the most common business checking account fees and how to avoid them:
- Monthly service fee: Some banks charge a monthly service fee for all accounts, including business accounts. If this fee is over $10, it’s probably worth it to find another bank or switch to online-only banking.
- Minimum balance requirement: In addition to the monthly service fee, many banks require that you keep a minimum dollar amount in your account each month. If you don’t meet this requirement, then the bank will charge an additional fee for non-sufficient funds (NSF).
- Paper statement fee: Some banks charge a fee for mailing paper statements instead of providing them online; others charge a higher fee if they provide them electronically.
- Overdraft fee: When you’re unable to cover your expenses with available funds in your account and you need more cash, an overdraft takes place. Banks will charge you an overdraft fee if they have to provide that extra money for you. These fees are usually around $30-$35 per overdraft.
- Transaction fees: Some banks charge a per-transaction fee for anything you write on your debit card or use an ATM for. These fees range anywhere from 25 cents to $1 per transaction and could quickly add up if you make several transactions in a month.
How to choose the best business checking account in North Carolina
Business checking accounts vary widely in terms of their interest rates, fees, and other perks. Make sure to carefully evaluate each account’s features before you open an account. Here are some features that may be important for your business:
- Interest rates: Most business checking accounts offer free check writing, with no minimum balance required to avoid fees. However, many accounts come with an interest rate that’s below market average — as low as 0.05 percent. If you’re planning to keep a large amount of cash in your account, look for a higher interest rate or consider opening a money market deposit account instead.
- Cash management tools: Some business checking accounts offer automated online transfers between your checking and other bank accounts, which can help you keep your finances organized and track cash flow more easily. Other services such as text message or email alerts can help you monitor your account activity quickly and easily — great if you’re on the go or have a lot of employees who handle transactions on your behalf.
- Fees: Business checking accounts usually have monthly maintenance fees that vary depending on the size of your account balance or how much money you move into the account each month. Avoiding these fees is often easy; just don’t let your account balance drop too low or leave it inactive for too long.
- Account Accessibility: Account accessibility is important in that your account must be accessible at any time during the day and night, seven days a week, in order for it to facilitate your business needs. If you need access to your funds at any given moment, then this is something you should consider before choosing an account provider.
- Monthly Service Fee: Having a monthly service fee is common in today’s business checking market. However, you should take into consideration the amount of the fee and if it is worth paying for the services provided by your bank or credit union.