Why do you need a business checking account?
There are many benefits to having a business checking account. Here are just some of them:
- Accountability: When you have a business checking account, you can be held accountable for all financial transactions that occur with the company’s name on it. This makes it easier for those who are interested in investing in your business when they see that there is no ambiguity about who is making the decisions about where the money goes and what it’s used for.
- Flexibility: A business checking account allows you to be as flexible as you need to be with your funds. You will be able to access money when and how you need it without worrying about whether or not anything will come out of your personal checking account.
- Track your income and expenses more easily: When you have one account for both personal and business expenses, it’s easy for them to get mixed up and hard for you to keep track of how much you’re spending on what. By keeping them separate, it makes it easier for you to see where your money is going.
- Business interest rates: Some banks offer higher interest rates on business checking accounts than on personal accounts. A higher interest rate can make it more cost-effective to store your money in a business account instead of in a savings account.
- Receiving payments: Receiving payments can be one of the trickiest parts of owning a business. Unless you have a regular customer base where customers regularly pay you on time and in full, chances are you will have to deal with late payments from time to time. Late payments can be a real problem for your cash flow and even lead to more serious issues later on if not handled correctly. To help you deal with these problems, many businesses choose a business checking accounts as an alternative to personal checking accounts.
- Separate personal and business finances: Businesses need to keep their finances separate for many reasons, but the most important reason is to prevent any potential losses from impacting personal finances. A business checking account can be set up for one business to pay bills and expenses using the money from the company’s funds. This is a way to avoid any potential overdrafts or fees that might be incurred.
What do you need to open a business checking account in Ohio?
Different banks may have different requirements for the documents you’ll need to open an account, but in general, you will need:
- Federal Tax ID Number (EIN) or Social Security Number (SSN).
- Proof of identity: State-issued identification card, Passport
- Proof of business ownership: Business license_,_ Articles of incorporation, partnership documents, and/or shareholder agreements.
- Proof of residency: Utility bill (electric, gas, cable/internet, bank statement).
- Business name
Common business checking account fees in Ohio
Here are some of the more common business checking account fees:
- Monthly maintenance fees: These are common with free checking accounts and can cost as much as $10 per month. Be sure to shop around to avoid getting stuck paying this fee.
- Minimum balance fees: Some banks will charge a monthly fee if your account balance falls below a certain threshold. For example, you may need to maintain at least $2,500 in your account to avoid this fee.
- Paper statement fees: Many banks will charge you extra if you request paper statements instead of viewing them online or through email. This can cost as much as $6 per month.
- Check-processing fees: Banks charge for processing each check you write, usually around 10 cents per check. If you have employees who write a lot of checks, this can add up quickly.
- ATM fees: Bank-owned ATMs charge exorbitant fees, sometimes as high as $5 per transaction! Using an out-of-network ATM can also put a dent in your balance since some banks charge extra when you use another bank’s ATM.
- Outgoing wire transfers: Many banks will charge $20-$30 when you send an outgoing wire transfer to another bank or company. Because wire transfers usually take place during non-business hours, many companies may be unaware of the fees until they get their statements at the end of the month.
How to choose the best business checking account in Ohio
Here are some features to look out for when choosing a business checking account.
- Tiered interest rates: If a bank advertises tiered interest rates, this means they offer different rates depending on the amount you keep in your checking account. For example, perhaps they’ll charge 10% on accounts with $5,000 or less, but 5% or 0% on accounts with more than $50,000. If you’re planning to keep a lot of money in your business checking account, this can be a very good factor to consider.
- Free online banking: Whether your business is small or large, managing expenses online is convenient. It allows you to access your account information from practically any location at any time of day. Online banking also makes it easy to run reports so you can stay on top of your spending and analyze your finances. With free online banking, you won’t pay an annual fee just to be able to view your account balance online or make transfers and payments between accounts.
- Monthly statements: With a traditional business checking account, you usually have to pay an annual fee in addition to monthly service charges just to receive monthly statements. This can add up quickly if you’re running a large company with hundreds of employees, but with many banks offering free online statements, there’s no reason not to go paperless.
- Free business checking accounts: A free business checking account does not mean that it won’t cost anything to use. There is still going to be an expense with setting up and maintaining the account, otherwise, it wouldn’t be profitable for the bank or credit union involved. Free business checking accounts often require fewer fees for services such as check orders, deposits, withdrawals, and transfers. They also tend to have fewer fees associated with them than premium accounts do. However, free business accounts usually have lower interest rates than premium accounts.
- Fees: Make sure that there aren’t any hidden fees associated with the account. Some banks will charge a fee for using certain ATMs, but others won’t charge anything for using an ATM. Check if there are any monthly maintenance fees, overdraft fees, or other charges associated with your account as well as the terms and conditions of the account before opening it.
- Online banking: A good business checking account will provide online access through its website or through dedicated smartphone apps. Allowing you to access your funds whenever you need them is important for managing your cash flow effectively and keeping your finances secure.