Guide to business checking accounts

- Money transfer
- International business
Opening the right (small business) checking account is the first big step of your start-up, as most business types are legally required to open business checking accounts at a bank.
In this comprehensive guide, you will find out…
- What to consider when choosing a business checking account
- How to open a checking bank account
- Ways how to improve your traditional business checking account
What is a business checking account?
A business checking account is a type of bank account specifically designed for managing the finances of a business. Unlike personal checking accounts, which are used by individuals for everyday transactions, a business checking account is tailored to the needs of a company, whether it’s a small business, a large corporation, or a sole proprietorship.
This account allows businesses to deposit income, pay bills, and manage cash flow efficiently. It usually comes with features such as the ability to write checks, make wire transfers, and access online banking services. Additionally, having a separate business checking account helps keep business and personal finances distinct, which is crucial for accurate bookkeeping, tax purposes, and legal liability protection.
In some cases, banks may offer business checking accounts with added benefits like higher transaction limits or access to business credit. Specialised accounts, such as a small business checking account, further cater to the needs of specific target groups.
What to consider when choosing a business checking account?
Before choosing the right business checking account, it is recommended to make a priority list with criteria such as interest rates, security, etc. to get an initial overview over your needs.
Costs
When it comes to choosing the right business checking account, costs are among the most crucial factors. Pay close attention to fees such as monthly account management charges, transaction fees, and costs for additional services like international payments. If your business frequently engages in cross-border transactions, consider the fees for using the SWIFT network as well as FX margins. As these costs can add up quickly, it’s important to choose a financial provider that offers transparent and competitive pricing schemes.
Interest rates
While business checking accounts are primarily used for managing transactions rather than saving, it is still advisable to compare the interest rates offered by various providers. This comparison should include not only the checking account itself but also any associated savings accounts that may be available. By carefully evaluating these rates, you can make your idle funds work for you. Even in a low-interest-rate environment, maximising any potential returns can enhance your business’s profitability. Therefore, it is essential to consider not just the fees and conditions of the account, but also the potential interest earnings that can be generated.
Security
Make sure that the bank you select offers robust security measures to protect your funds and sensitive information. One key aspect to look for is deposit insurance, which guarantees that your deposits are protected up to a certain amount, typically by a government-backed scheme such as the Financial Services Compensation Scheme (FSCS) in the UK. This provides peace of mind, knowing that even in the unlikely event of the bank’s failure, your business’s deposits are secure up to the insured limit.
Scope of services
Look for a bank that offers comprehensive services such as physical and virtual debit cards, which allow easy access to funds and can be used for day-to-day expenses. Additionally, consider whether the bank offers foreign currency accounts, which can be essential for businesses dealing with international transfers. This ensures that your business has the flexibility and tools needed to manage its finances effectively across different markets.
Branches or direct banking
Traditional branch banking offers the advantage of face-to-face services, which can be invaluable for complex transactions or when building a personal relationship with your bank. On the other hand, direct banking, which is conducted entirely online or via mobile apps, offers convenience and often lower fees. Deciding between these options depends on whether you value personal service and in-person assistance or prioritise ease of access and cost-effectiveness.
Additional criteria
Consider additional criteria, which are important for your business to open a checking account. For instance, some banks allow businesses to open accounts entirely online. This option is ideal for those who prefer a quick, paperless setup. Alternatively, some banks require in-person visits to a branch, which may be preferable if you value face-to-face interaction or need assistance with the process.
To improve your financial strategy, you might also explore complementary account types, such as a merchant account, which can streamline payment processing and improve cash flow management alongside your business checking account.
How to open a checking bank account in simple steps
Follow these 7 steps to easily open a business checking account that perfectly fits your needs.
1. List your requirements
The first step in opening a checking bank account is to list your requirements. Consider factors in the previous section such as access to company debit cards, and whether you require additional services like foreign currency accounts. This checklist will be the cornerstone of choosing your provider.
2. Compare banks
Next, compare different providers to find the one that best meets your needs. Compare your checklist against multiple banks and fintech companies to create a preliminary selection. Also consider using comparison or review platforms such as Trustpilot to get authentic customer feedback. After this step, you should have a list with approximately 5 to 10 possible providers.
3. Narrow down your list
Once you have compared various providers, narrow down your list to a few top contenders. Evaluate each option based on how well it meets your requirements, including fees, services, and customer reviews.
4. Answer open questions
Comparing bank information can be daunting, as banks might have different ways to calculate or display their fee structure. Therefore, it is worthwhile approaching your top contenders to get a personal introduction and to answer all open questions.
5. Choose your bank provider
Now you should have all the necessary information to choose the business checking account which best fits your business needs.
6. Provide required documentation
Provide all the necessary documentation to open your business checking account.
This might vary according to bank and jurisdiction, but usually includes the following:
- Proof of Identity: Personal identification for all individuals who will be signatories on the account, such as a passport or driving licence.
- Business Registration Documents: Proof of business registration, such as a Certificate of Incorporation or a partnership agreement.
- Proof of Address: Recent utility bills or bank statements showing the business address.
- Tax Identification Number: Your business’s tax identification number or employer identification number (EIN).
- Company Resolution: A resolution or authorisation from your business allowing you to open the account, if applicable.
7. Open your checking bank account
Congratulations, you have finally opened your business checking account.
Don’t stop here – the next sections will tell you how to enhance your account and turn all disadvantages of traditional banking into valuable benefits for your business.
Pros and cons of a traditional business checking account
Traditional banks offer a significant advantage in terms of personalised service, but before choosing the best fit for your business, it is crucial to explore the different business bank account types. The face-to-face interactions with bank representatives can be invaluable, especially for complex transactions and tailored financial advice.
The long-standing reputation of established banks also provides a sense of reliability and trustworthiness, as traditional banks are equipped with robust security measures to protect your funds and personal information. Banks also offer deposit insurance through government-backed schemes.
On the other hand, traditional banks can pose higher transaction costs, which is especially true for foreign transactions and currency exchange fees. Additionally, if your business holds foreign currencies, you may not receive any interest payments on these balances.
Traditional banks may also have slower services due to the need for in-person visits and manual procedures, which can affect the timeliness of transactions.
Pros | Cons |
---|---|
Personalised service | Higher transaction costs |
Enhanced security | No interest on foreign currencies |
Trusted providers | Slower services |
Deposit insurance | Limited digital features |
Is there a way to improve your business checking account?
Even though traditional banking offers security and personal assistance, it comes at a high price, most notably in terms of foreign transaction costs and a lack of interest rates on foreign currencies.
With amnis multi-currency account, you can enjoy all the advantages of your business checking account while minimising its disadvantages:
- Pay global like a local: Abandon the costly SWIFT network and use local payment schemes such as ACH in the US, SEPA in the EU, Faster Payment in the UK, EFT in Canada and SIC in Switzerland, no matter where your business is located.
- Earn cashback on foreign currencies: Your safeguarded funds at amnis help you earn high interest on business accounts while your money remains protected to the highest standards. amnis is one of the few providers forwarding interest on foreign currency accounts, ensuring you receive balance cashback not only in your home currency.
- 24/7 self-service: Easily access amnis online, from web and mobile, and manage your virtual IBAN account whenever you need.
- More features: amnis’ pricing plans start at EUR 0/month and include additional features likes unlimited virtual multi-currency debit cards next to physical cards.
amnis is the perfect complement to your business checking account
amnis is the ideal solution for businesses to reduce transaction costs, improve efficiency and make your idle funds work for you.
Still questions? Open a free and completely non-binding demo account in 30 seconds to test our international money transfer platform and to gain access to our financial ecosystem.