What is Business Banking?

Are you curious about what is business banking and how it can benefit your small business? Business banking is a type of account that is designed specifically for businesses. It should offer a range of features and benefits that can help you manage your finances more effectively.

Banks are crucial for the advancement and growth of small businesses throughout the United States. It's true that many entrepreneurs integrate their business activities with their personal bank accounts. However, it often cripples their financial resources, therefore, slows their ability to grow their sales.

On the other hand, during this COVID economic climate, entrepreneurs have also realized the importance of having a separate bank account to track business activities. It's also helpful when creating your business plan's financial reports. 

5 Reasons Why Entrepreneurs Should Have a Business Bank Account

When your new venture is in its early stages, and you're still growing, having a separate financial account can be pretty challenging. Why? Because one of the challenges for first-time entrepreneurs is to keep their personal money separate from their business money. Here are five reasons why entrepreneurs should consider opening a business account:

1) Essential for the growth and development of small companies. 

Banks are essential for the growth and development of small companies. Entrepreneurs need to find a bank that offers other financial services with no fees or minimum balance requirements, quick qualifications, and unparalleled customer service. These features can help a business owner get their company running smoothly from day one without any hiccups.

2) Entrepreneurs can use them to gain access to possible funding opportunities. 

Banks offer small business services that help entrepreneurs gain access to funding opportunities. They can also provide advice and guidance on obtaining a loan and managing your funds effectively. Banks will even issue you a debit card for quick and easy payment whenever needed.

3) All transactions related to the company will go through the account only. 

A business checking account will help you keep track of all transactions related to the company. It helps manage your funds and make sure that nothing falls through the cracks. This, in turn, enables you to control and monitor your business funds and identify spending habits.

4) Helps manage invoices and receipts quickly so you can easily track your business's income and expenses. 

This is important to create your profit/loss statements. Cash flow is an essential part of banking. Some credit vendors will require this before offering you a line of credit.

5) Maintaining proper records is easier for tax purposes. 

You should always seek professional advice from a tax accountant. However, many of your business expenses are eligible for a tax deduction. Using your business account will ensure that your transactions are business-related.

What are the Requirements to Open a Business Checking Account?

Business bank accounts are not as difficult to open as you might think. Some standard requirements besides your name and address are:

• Proof of incorporation such as your Articles of Organization.
• EIN or Social Security Number.

You will need to provide your personal and business information. The application process should take about 10 minutes. Many of today's entrepreneurs opt for online and mobile banking opportunities and altogether bypass traditional brick-and-mortar banks. However, the benefits of having a face-to-face relationship with a bank representative cannot be overstated.

What are the Benefits of Online Business Banking?

Online banking is gaining in popularity among business owners today. Some entrepreneurs prefer banks with online-only savings and checking accounts because they offer a cheaper alternative to brick and mortar banks.

They also carry similar business banking services. Here are the benefits of opening an online bank account for your small business:

• No hidden fees
• easy money management
• Debit & Virtual Cards
• Easy Invoicing
• Integrated apps

Is Online Business Banking Safe?

Although the internet is home to many scams, online business banking is perfectly safe as long as you take the proper precautions. Here are some of the concerns that entrepreneurs may have about online banking:

Is my Information Secure?

Many entrepreneurs are opting for mobile banking to avoid the traditional brick-and-mortar banks. It is easy to transfer money between your accounts, pay employees with payroll debit cards, and view account information. Mobile banking is extremely safe compared to internet banking.

You will need to share your personal and business information with the bank to open and manage your account. Ensure that their security features and encryption providers are up to date.

Is my Money Safe?

Ensure to choose business banks protected by the FDIC. This means that if your bank goes under, you will get your money back up to a specific limit.

Hackers commonly use public internet connections to steal information from users. So, make sure you only sign in on a secure network connection. You need to be aware of your surroundings when using your smartphone to access your account.

How do I know if my bank is legitimate?

Only deal with banks acquainted with reputable financial institutions. You can find this information easily online. So, do your research before opening any bank accounts.

What are the Disadvantages of Online Business Banking?

As with any tool, there are some disadvantages to online banking.

• First of all, you will not handle your business bank account at a physical location. This may be an inconvenience for some entrepreneurs.
• Secondly, you may have difficulty finding business deposit accounts for your new company. Banks are hesitant to work with startups because they are often high risk.
• Lastly, you may have difficulties finding the exact service that fits your specific business's needs. Entrepreneurs should know what they want to avoid wasting time and money on services they don't need.

How to Choose Free Business Banking Services

Consider the fees and minimum balance requirements. 

You need to consider some things when looking for a business checking account. Ensure that the account has no monthly service fees and minimum balance requirements. It would help if you also were careful of the fine print. Some online banks have waived service fees if you meet certain qualifications, like having a daily or monthly minimum balance.

Examine the transaction and cash deposit limits.

Look at the limits on transactions and cash deposits. Evaluate how many monthly transactions your business makes and how much cash it deposits. Many banking products and services place limits on transactions and cash deposits (and charge fees for exceeding those limits), so you'll want to select an account that meets your needs.

Pay attention to additional account features.

Think about where you can use your business debit card. Also, think about if you want an account that earns interest. Finally, decide if you need online and mobile banking tools. Make sure you know about any incidental fees or charges that may apply.

Think about how you would prefer to open an account.

Some banks offer different ways for you to open a business account. You can do it online, over the phone, or by going to a branch. Other banks have only one way to do it, which might be online or over the phone.

What Financial Institution offers 100% Online Business Banking Products and Services?

Business Checking Account with Novo, the Small Business Fintech

There are many new banking platforms emerging in today's economic environment such as Novo.  Novo, the powerfully simple small business banking platform sponsored by Middlesex Federal Savings, F.A is fabulous for entrepreneurs and small businesses.

Opening a business account with Novo is easy. It's free, with no hidden fees and you can open a business account without a minimum deposit. 

They have features such as creating invoices, accessing your virtual debit card while you're waiting for your physical card in the mail, and setting aside money with Novo Reserves.

Novo Reserves lets you allocate money towards budgets for better cash management. Novo's business banking services are integrated with different apps such as Stripe, Quickbooks, Amazon, Shopify, Etsy, and many more merchant services. Business owners need a way to track their sales and balances across many payment platforms.

Novo is a good banking platform for its online user experience and free services. We rate bank Novo as the easiest. Its user-friendly Novo mobile app highlights motivational quotes everyday to keep you inspired.

Mercury Bank

Mercury is building business banking for startups. Their banking services fall under two pricing structures: Standard ($0) and Tea Room ($250K+ in deposits).

It's free to open an account with no monthly fees, minimum deposit, or overdraft fees. Mercury offers both savings and checking accounts for small businesses.

Mercury is a great choice if you are working with larger amounts of capital. If you qualify for Mercury Treasury, you can put your extra cash into U.S Government Securities with their treasury management.

Banking with Quickbooks Checking

Quickbooks offers business banking services through their partner, Green Dot Bank. This business banking partnership allows them to offer heavyweight features making their business checking accounts a popular choice among business owners. In addition, they offer a savings element which makes them a desirable option.

The drawback to Quickbooks powerhouse of accounting software features is the learning curve. For this reason, it can be intimidating but the services are unparalleled for creating 1099's, tracking payroll services, managing cash flow, and customizing your workflows.

Intuit Quickbooks is a great option for small business owners that would benefit from having accounting features to handle your company's financial dealings.

Conclusion

If you're an entrepreneur, it's important to have a business bank account. Here are five reasons why: 

1) You can separate your personal and business finances.

2) You may be able to get a lower interest rate on loans or lines of credit.

3) You can receive payments from customers more quickly.

4) It's easier to get funding if you have a business bank account.

5) Online banking makes it easy to keep track of your business finances.

Learn more about the benefits of online banking for entrepreneurs by visiting Novo, our partner website.