THE IMPORTANCE OF BUSINESS CHECKING ACCOUNTS
What’s the one financial account no business, even sole proprietorships, can do without? A business checking account. It’s the primary tool for making deposits and paying bills. It’s important because getting the right account can directly benefit your bottom line. Here’s what you need to know to make a smart choice for business checking.
CHECK OFF THESE BENEFITS
Even if you’re a business of one, a business checking account is imperative. By keeping your business and personal transactions separate, you’ll:
- save time on bookkeeping
- make tax preparation simpler and more accurate
- be able to easily calculate profit
In addition, by opening a business checking account, you’ll build a business banking relationship. When the time comes for getting a business loan, you’ll be glad to have an established connection with a credit union or bank. Above a certain amount, many business checking accounts pay interest. With a Consumers business checking account, for instance, you start earning interest on daily balances over $10,000.
RESEARCH THE FEES
For any business checking account you’re considering, read the fine print and compare account services and requirements with your business operations. An introductory offer might sound good until you delve into the details. For example, “free” business checking might turn into “fee” checking if you don’t maintain a minimum balance or exceed certain transaction limits.
UNDERSTANDING BUSINESS SAVINGS OPTIONS
Smart business owners know that one of the best ways to weather the ups and downs of business cycles is to have money set aside in a business savings account. A cash cushion can also protect your business when unexpected expenses come up.
Here are three savings options that can help you better manage expenses and earn interest on your hard-earned money.
BUSINESS SAVINGS ACCOUNTS
The easiest option is a business savings account. It works just like a personal savings account except it’s for your business. At Consumers, business savings earn interest on balances over $50. Our business saving accounts work just like personal savings accounts and they offer:
- unlimited deposits and withdrawals
- 24/7 online access to your account
A business savings account is an ideal place to park funds you need easy access to. Many businesses use them to cover unexpected expenses & save for taxes while earning interest.
Business CDs (certificates of deposit) are another financial saving tool. CDs are the place to save money you don’t need to use for at least six months. During the CD’s term, you can’t access your money without incurring fees, but you can earn higher interest rates than with business saving accounts.
Typically, the longer the term, the better the interest rate. Consumers’ CD terms range from six months to five years with opening deposits as low as $1,000.
MONEY MARKET ACCOUNTS
Some business owners opt to deposit funds in money market accounts. Money market accounts typically pay higher interest than business saving accounts. They also have higher minimum deposits.
Money market accounts have three key differences from business saving accounts.
First, money market accounts are considered an investment. Funds you deposit are used by your financial institution to invest in stable, short-term securities. Second, the interest rate is variable; as your money market balance goes up, so does your rate of return. Third, to earn the higher interest offered by a money market account, you have to meet minimum deposit requirements.
At Consumers, business money market accounts earn interest on daily balances over $2,500.
Some financial institutions limit the number of transactions allowed each month for business money market accounts. At Consumers, you get unlimited deposits and withdrawals. (What’s more, all deposits at Consumers are NCUA insured up to $250,000.)
CHOOSE ONE OR ALL
Your business checking and savings plan can utilize a checking account and all three savings tools if you want. The great part is that it’s up to you.
If you have any questions, please contact me at the info below. In addition to helping you with business checking or savings accounts, I can assist you with setting up a business credit card, as well as financing for the projects that will help your business grow.
Learn more at ConsumersCU.org.