Why do you need a business checking account?
The following are some of the benefits that you may find helpful to your business:
- Accounts that can be accessed anywhere: Many banks now offer online banking services to their customers. This allows businesses to easily access their accounts from any location with an Internet connection. This can help you keep track of expenditures and prevent overspending.
- Payroll: Payroll checks can also be paid with business checks. This eliminates the need to have actual cash on hand in order to make sure people are paid on time.
- Accounting: You will also find it easier to keep track of your expenses since they will all be recorded in one place rather than having them spread out all over the place. In addition, filing your taxes at year’s end will be much simpler since everything will already be recorded in one place.
- Separate business account: This keeps the finances of your business separate from your personal finances, which can be helpful when completing tax forms or applying for loans or other financial assistance in the future. Having separate accounts for each aspect of your company’s finances will also help you avoid paying unnecessary fees.
What do you need to open a business checking account in Texas?
Before opening a business checking account, you will generally need the following:
- Articles of incorporation or formation from your secretary of state.
- Proof of identity. Some banks require all of their customers to provide proof of identity, so be prepared with your driving license, passport, or similar documents establishing who you are and where you live.
- Proof of address. The bank may want proof that you live at your stated address, such as a utility bill or cable bill that’s less than 60 days old.
- Tax identification number. You’ll also need a federal employer identification number (EIN).
Common business checking account fees in Texas
Most business checking accounts come with several fees, and it’s important to understand what those fees are. Here’s are the most common fees:
- Overdraft or non-sufficient funds (NSF): Banks charge overdraft or NSF fees for checks or electronic transactions that exceed the available balance in your account, or for items returned because of insufficient funds. The amount varies by bank and the type of transaction, but the average is about $30 per occurrence.
- Minimum balance fee: This is the most common and one of the easiest to avoid if your bank will waive it. It’s a flat fee charged each month if your balance falls below a certain level, usually $1,000 or $2,000.
- ATM fees: Banks can charge for using their own ATMs and for using out-of-network ATMs, either separately or in conjunction with another fee. The latter is more common and includes both surcharges and network fees, which go back to the card networks.
- Monthly service fee: Many banks charge a monthly service fee for their business checking accounts. This generally ranges from $10 to $25 per month, although some banks may offer a lower rate or waive it if you meet certain conditions.
- Teller transactions: If you use a teller to make deposits or withdrawals, there could be additional fees or limits on how many transactions are allowed per month. Online-only accounts usually waive this charge because they don’t involve in-person service, but some banks will allow only a certain number of transactions at an ATM per month before charging extra.
How to choose the best business checking account in Texas
The first thing you need to do before starting to look at the different options is to assess the needs of your business. Here are some factors to consider:
- Tiered interest rates: Most new businesses don’t see significant revenue for quite some time. A tiered interest rate structure allows the business owner to accrue interest at a lower rate when initial deposits are small and can increase as balances grow.
- Free business debit card: Most people find it easier to manage their finances when they have one card for personal and another for business use. Checking accounts with free debit cards often offer more benefits than those without them. For example, they may include rewards programs or cash-back offers.
- Business-friendly services: A business checking account should provide access to basic financial services, such as check writing and online banking. Additional perks, such as bill pay or direct deposit capabilities, are helpful but not necessary.
- Online banking: While not every bank offers free online banking, most will offer some sort of free service that allows you to access your account from anywhere in the world. This is important for businesses because it allows them to manage their money even when they are away from their regular location working on other projects or traveling on business.
- Account fees: Once you’ve narrowed down the type of checking account that suits your business, look at the fees associated with the different accounts. Different banks charge different fees, such as monthly maintenance fees or per-check charges.