Why do you need a business checking account?
Here are some of the top benefits of having a business checking account:
- Free checks: Some business checking accounts provide free checks and statement covers.
- Mobile access: Most banks offer mobile banking services for customers, so you can review your balance, pay bills, and transfer funds from anywhere. However, if you’re looking for more advanced features such as bill pay and e-statements, you may have to pay an additional fee.
- Interest-bearing accounts: Certain business checking accounts offer interest that is comparable to those offered on personal savings accounts. These types of savings vehicles can be beneficial if you have extra cash sitting in your account between paying bills.
- Security: Your money will be safe for up to $250,000 if the account is FDIC insured.
- Money Management: Your business checking account can help you keep track of your cash flow, which is critical in running a successful business. You can set up alerts that tell you when you’re low on money and easily access information like your account balance and transaction history on your computer or smartphone.
- Access to cash: You can write checks and withdraw cash from an ATM. Both of these processes are convenient and make it easy for you to pay for business-related expenses.
- Taxes: When tax season comes around, you’ll be able to determine your revenue and costs much easier as opposed to only using a personal checking account for both personal and business expenses.
What do you need to open a business checking account in Washington?
Most business owners know that they’re going to need a checking account, but they aren’t exactly sure what documents are needed to open one. In order to open a business checking account, you will need the following:
- Personal information and contact information for each person who will be signing on the account. This includes name, address, and phone number as well as social security number, date of birth, and driver’s license number if applicable.
- Proof of ownership or partnership/corporate filing documents. This includes articles of incorporation, partnership agreements, or corporate documents as well as other evidence of your claim of ownership such as a certified copy of your personal trust agreement, corporate shareholder’s agreement, or any other document that supports your claim on the business and its assets.
- A business license, or other proof that you are legally doing business (If you don’t have a business license, you can go to your city hall and apply for one).
- Tax identification number (EIN).
Common business checking account fees in Washington
No matter which bank you choose, there are typically a few types of fees associated with a business checking account that you should be aware of:
- Minimum balance fees: Some banks charge a fee if you keep your balance below a certain amount — usually $1,000 or $2,500 — which can be costly for small businesses. Keep an eye out for this kind of fee if your cash flow is tight or you simply want to reduce costs.
- Monthly maintenance fee: These types of fees typically range from $10 to $25 each month for the privilege of maintaining an account with the bank.
- Non-sufficient fund (NSF): This fee applies when there isn’t enough money in an account to cover a transaction. For example, if someone writes a check when they have insufficient funds and it bounces, that’s considered an NSF transaction.
- Teller fees: If you’re making a lot of deposits and withdrawals or visiting the bank frequently, you may want to steer clear of banks that charge for teller transactions. The typical fee is $2 per transaction and can add up quickly if you’re making multiple trips each month.
- Overdraft fees: Banks make money by charging overdraft fees on reserve accounts. The fee is usually $35 per transaction, but some banks offer overdraft protection plans (for an additional monthly fee) that waive the overdraft fees in certain situations, such as when there is insufficent funds in the account or when the item being charged is under a certain dollar amount.
How to choose the best business checking account in Washington
Picking a business checking account can be a trying process. The best business checking accounts will include certain features, depending on your business needs. Here are a few factors you may want to look into before making a decision:
- Online banking: Many banks offer online banking as part of a business checking account package. Online banking allows you to deposit checks, pay bills, transfer funds between accounts, and more without ever stepping foot in a branch or waiting on hold with customer service representatives. It’s also an excellent way to track expenses.
- Mobile check deposit: Mobile check deposit allows customers with a smartphone or tablet to instantly deposit checks by taking pictures of them with their devices. This feature is available with certain bank apps or can be offered through third-party apps.
- Know what you want from your account: Do you want a lot of cash withdrawals? Then you’ll need an account with unlimited transactions. Do you plan on using checks and only occasionally writing a few ATM and debit card transactions? Then a free checking account might be all you need.
- Fees: Most business checking accounts include fees — some are unavoidable, but others are avoidable. Before opening an account, compare the fees with other financial institutions. Fees to avoid include monthly service charges, per-check charges, charge-per-transaction fees, and non-sufficient funds (NSF) fees.
- Security: Look for safety features like 24/7 fraud monitoring and an ATM identity theft protection feature. Also, check whether the bank offers overdraft protection. Some accounts come with this feature included as a value-added benefit while others will charge fees if you overdraw your account.