Owning your own company means making lots of decisions. We made deciding on a bank easier by picking the five best banks for small businesses. This was originally published on The Penny Hoarder, which helps millions of readers worldwide...
If you’ve started your own company — or you’re considering the move — you’ve likely marveled at the logistics required to pull it off.
Popular first-time small business owner (SMB) questions include:
How do taxes work now? What do I need to know about buying health insurance? What exactly qualifies as a business expense?There are many changes when you run your own show. And when you become a business owner, your banking needs to change, too.
That’s right, you can now open a business account.
Since vetting banks and business checking accounts probably isn’t how you want to spend your time when you’re self-employed, we did the leg work for you.
Here are some of the best bank accounts (specifically checking accounts) at a glance for small business owners.
Because we’re looking at business savings and business checking accounts for small- to medium-sized businesses (SMBs), we looked for banking services that cater to your needs — i.e. a small business whose cash flow might not be cracking six figures yet.
Best Banks for Small Businesses 2022
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Wells Fargo |
100 free transactions |
4,900 locations |
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Chase |
$300 signup bonus |
4,700 locations |
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Capital One |
Unlimited transactions |
70,000 ATMs |
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Axos |
$200 signup bonus |
Digitally savvy |
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Navy Federal Credit Union |
Member owned |
For military personnel |
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Lili |
Top-notch on mobile |
No minimum deposit |
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BlueVine |
High-yield checking |
No overdraft fees |
SEE DETAILS |
A reminder: We don’t know your business finances or your cash flow like you do. The best bank for your small business is going to depend on your situation.
Now, here are our favorites.
Wells Fargo
If your business can keep a reliable daily balance, Wells Fargo’s business accounts come cheap. It’ll only cost you $25 to open an Initiate Business Checking account at Wells Fargo. The Business Market Rate Savings Account also includes a $25 minimum opening deposit. Wells Fargo also offers business lines of credit between $5,000 and $100,000 for fixed interest rates as low as Prime + 1.75% APR. Secured or unsecured business credit cards with 1.5% cash back and sign-up bonuses between $300 and $1,000 are also available.
For more information on Wells Fargo bank’s features, check out our full Wells Fargo review.
Chase
As another “big four” bank, Chase’s business checking account offers familiar perks: a reliable brand and enough resources to keep things convenient. But its credit card offerings are particularly worth noting. The Ink Business Unlimited and Ink Business Cash cards offer rewards and a $750 sign-up bonus. Unlimited earns you 1.5% cash back on all purchases, and the Cash card earns you 5% back on select categories. Chase also offers business loans starting at $10,000 with varying interest rates and lines of credit up to $500,000.
For more information on Chase Bank’s features, check out our full Chase Bank review.
Lili
The Lili business checking account comes with its own Visa debit card. Whenever you spend any money, you’ll get a push notification asking you to swipe left or right to instantly categorize the expense as either “personal” or “business.” At tax time, this will allow you to easily maximize your expenses and reduce your taxable income, lowering your tax bill.
For more information on Lili’s banking features, check out our full Lili account review.
Capital One
You can likely guess that the credit card options landed Capital One on the list, but the checking and savings account options are worth a nod as well. If your main priority is credit cards, Chase may beat Capital One out, but if you're looking for comprehensive service (read: better savings and checking options), Capital One could be for you.
Along with an affordable bank account, Capital One offers three business credit cards and includes information upfront about the credit score you need to qualify for each one. Its cards offer between 1% and 2% cash back, free employee cards with spending limits and options for no annual fee. It also offers equipment loans, business installment loans and lines of credit that start at $10,000. Loan term lengths and repayment terms vary.
For more information on Capital One’s online banking features, check out our full Capital One 360 review.
Axos
Axos’ checking and savings offerings fall short of Capital One’s and Wells Fargo’s, and there are no credit cards. But if you’ve been in business for a few years, are looking for more substantial lending and don’t have a considerable sum of transactions each month, Axos Bank is worth a look. Your money will earn a high APY but you’ll have to earn your fee waiver.
Axos Business Savings requires a $1,000 initial deposit and pays 0.20% APY. The $5 monthly fee is waived with an average daily balance of $2,500. The bank offers lines of credit and commercial loans starting at $250,000 to businesses at least two years old. It doesn’t offer any credit cards.
For more information on Axos’ banking features, check out our full Axos bank review.
Navy Federal Credit Union
You’re a small business owner now. Maybe you don’t want to do business with a multibillion-dollar corporation. If that’s your speed, a credit union like Navy Federal might be right for you. These member-owned nonprofits can provide a comfort and familiarity that the big four can’t offer, even if they can’t match the perks.
In addition to its Business Checking account, Navy Federal offers secured and unsecured business loans s
BlueVine
BlueVine is an honorable mention in this list, because it doesn’t offer a full suite of business banking services. But its 1.5% APY on your business checking account balance makes it stand out among even modern banks for businesses, so it’s worth mentioning. With the account, you can pay vendors and bills by ACH, wire or check and set up recurring payments. You can also apply for credit lines up to $250,000 with rates as low as 4.8%. If a brick-and-mortar location isn’t a top priority, add this one to your list.
What Is a Business Bank Account and Why Do You Need One?
A business bank account is where you keep your money for the company. It’s an account used specifically for the business — so, separate from your personal checking or savings accounts — where you hold your earnings, pay for related expenses (supplies, vendor services, utilities, etc.) and more.
Keeping these transactions separate is helpful come tax time. If you choose to apply for a business loan (some banks require you to have an account for a designated time period) or relief funds down the road, you’ll also need an account to share your financials and house the money.
No matter how big or small your operation is, it’s strongly recommended that you open a business bank account. At a minimum a business checking account is a good way to stay organized, period. You want a place to keep track of all the money coming in and out of your business and have a clear-cut record of your finances.
Banks for Small-Business Owners
Most major banks offer business accounts, as well as many credit unions. You can opt to open an account with an online-only bank or solely brick-and-mortar institution, or choose one that offers a hybrid model.
If your personal bank offers business bank accounts, that might incentivize you to open an account with your current institution — but run the numbers first. While you may have access to the merchant services you’re accustomed to and be able to link accounts (and seamlessly transfer money from your business bank accounts to your personal checking account, for example), there may be higher transaction fees or hidden costs.
You have lots of options when it comes to banks for small business, so do some research.
Common Types of Business Checking and Savings Accounts
Like with personal accounts, you have many options when it comes to choosing a business bank account. Here are the basics of business banking:
Business Checking Account
Some banks, specifically larger ones, may offer a variety of business checking accounts. Depending on factors such as your daily minimum balance, the number of transactions performed in a month and the amount of services you need, you can choose a checking account to fit your needs and budget.
Business Savings Account
You can select this type of account to build cash reserves and earn interest on your money. And similarly, some banks offer more than one type of account (ranging in monthly maintenance fees) based on how much money you plan on saving and the number of transactions you make in a month.
High-Yield Business Savings Account
With this type of account, you have an opportunity to earn higher interest rates on your money. Typically, there is a higher minimum deposit required and tighter restrictions around the number of monthly transactions allowed for this account.
Many banks offer business loans and business credit cards (more on those next) and certificate of deposit (CDs). You also want to keep an eye out for new-business-account bonuses (usually in the form of a couple hundred dollars) for owners just opening their account.
There’s no one “best bank for small business,” so it’s important to take inventory of what you want and need out of business banking.
What to Look for in Business Banking
There are several angles you could take to determine the best banks for small businesses, depending on the business needs of your company. To help you choose the best for your business, we focused on four main banking services: Small business checking account, business savings account options, small business lending and business credit cards.
Small-Business Checking Account and Business Savings Account Options
We looked at balance requirements, (monthly) fees and transaction and deposit limits.
In general, it’s a good idea to look for business bank accounts that offer the following:
A low minimum balance requirement A low monthly maintenance fee (or one that can be easily waived) Minimum monthly service fees (bonus for no monthly fees!) Free business checking A business debit card Free cash deposits (at least up to a point) Online banking Mobile banking (an app) Online bill pay Payroll servicesUnlimited and free transactions (or banks that offer a reasonable limit for your needs) are also good to look for. Related, if your small business is verging into medium-sized-business territory, you might be eligible for a number of free transactions until you reach a certain limit. In that case, it may be worthwhile to move up to the next business checking account level to match your needs.
Small-Business Lending
There are three main ways you can borrow money for your business. We compared what banks offered across these three categories:
If you’re a qualified small business owner, you can take out SBA loans, which are backed by the Small Business Administration and, as a result, come with lower interest rates. You can also secure a business term loan, which operates in the same way as a personal loan. You can secure a business line of credit, which can provide you with flexibility if you’re not sure how much money you need.Business Credit Cards
While we don’t advocate spending just to get credit rewards, there’s no reason to leave perks for your existing expenses on the table. We looked at the annual fees, interest rates and perks each bank offers with their small business credit cards.
Find the Best Bank for Your Small Business
You have many options when it comes to small business bank accounts. And your mileage with different banks and business checking accounts will vary depending on your wants and needs.
Ultimately, only you can determine the best business bank account for you and your business.
Do you want to use the same bank for your personal account, for example? Are you willing to step outside of the free checking options to earn more perks? Are you holding out for a debit card you can put your dog’s face on?
No matter what’s on your checklist, the options listed here should give you an idea of where to look next. If Wells Fargo and Chase were catching your eye, for instance, it might be worth comparing offerings from other big banks like Bank of America and Citibank as well.
And if you like the idea of Navy Federal, search for credit unions in your area to compare. If your small business is location-based and caters to a local cliente, working with a neighborhood credit union might benefit you in other ways a bigger bank cannot.
The right bank for your business and personal finances is out there. You’ve just got to hunt it down.
Frequently Asked Questions (FAQs) About Small-Business Banks
We’ve rounded up and answered some of the most common questions about small business banks.
Most traditional banks, community banks and credit unions offer business banking services, including checking accounts, savings accounts, loans and credit cards. Some online banks cater solely to businesses. Which is best for you depends on the needs of your business, like how much money you hold onto, your payroll and accounting processes, and your borrowing needs.
Startups tend to benefit from lean and nimble financial services. Look for an institution that makes it easy to upgrade your account as your business grows and rewards you for it. You likely also need access to loans, credit cards and lines of credit to support cash flow as you grow, so look for banks with favorable loan terms, lines of credit and rewards credit cards.
Keeping your business finances separate from your personal finances is important regardless of how your business is structured. Even if you’re a sole proprietor or independent contractor, a dedicated (personal) bank account helps you track your business income and expenses easily. If you’re structured as an LLC or corporation, a business bank account in the company’s name is important to maintain the legal separation and protections between you and your business.
checking and savings. They provide deposit and savings accounts for your cash, debit cards, ATM access, and sometimes perks like interest and cash bonuses. The main difference with a business bank account is that you need to open it in the name of a legal business entity (like a registered LLC or corporation) and usually have to provide a tax ID (EIN). If you’re a sole proprietor or independent contractor, you can just open another personal bank account in your name.
Small businesses need banks that will support them during times of growth and in lean times. That means a variety of account options that are easy to upgrade as your business grows, and lending and credit options that help you maintain cash flow when revenue is low. If you’re part of a localized small business community, you might also look for a community bank or credit union that keeps its money within your community.
Yes, but it’s not advised because mingling your personal and business expenses makes managing your business finances difficult and could lead to issues down the line, with taxes for example. If you run an LLC or corporation — where the business is a separate entity from you — mixing your finances could negate some of the legal protections the structure is supposed to provide, because you’re not clearly drawing a line between your assets and those of the business.
Contributor Dana Miranda is a Certified Educator in Personal Finance® who has written about work and money for publications including Forbes, The New York Times, CNBC, Insider, NextAdvisor and Inc. Magazine. Information from former contributor Jake Batemen is included in this review.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.