Your Guide To Free Business Checking Accounts

Small businesses need all the help they can get to stay within budget, and that’s where free business checking accounts come in handy. Many small business owners forget to take into consideration that every little bit helps. While some might understand the value of free business checking accounts, others might initially think that something this insignificant is hardly important as it relates to the bottom line. What we’re doing to do is break it down for small business owners; show you why free business checking accounts are important, how they save you money and what you can do to better your business as a result of a simple free business checking account.

Let’s start with a math problem and an example. Let’s say that your small business banks with Bank of America; as many do. The bank has locations everywhere across the country, it’s convenient and it’s just easier to find locations. However, Bank of America does not offer free business checking accounts unless you maintain significant balances, which is often not a possibility for the small, homemade business just getting started. Without at least $5,000 in your business checking account at all times – virtually impossible for an Etsy shop, for example – Bank of America charges your small business a fee of $15 per month. It doesn’t seem like much, but that adds up to $180 per year in fees you are paying just for using this bank to house your account.

Now add up the other small fees you’re paying; credit card processing fees, ATM withdrawal fees when you use a foreign ATM, deposit fees if you deposit more than you’re allowed to in a month, transaction fees if you use more transactions than the bank allows each month. Each of these small fees adds up quickly and can cause your small business as much as, if not more than, $1,000 per year. With customers increasingly wanting to make cashless payments, getting the cheapest card machine has never been more important.

The problem with free business checking accounts is that they’re not always as readily accessible as many small business owners would prefer. Big banks, with their convenience and locations, tend to charge high fees and premiums no matter what. It’s the smaller hometown banks and credit unions that are more likely to offer small business members their own free checking accounts, and it’s typically where you should begin to look for free checking. Another option for small business owners in the market for a free business checking account is an online-only bank. Many of these offer more inexpensive banking options to small businesses because it costs less to run these banks without employees in teller positions, security positions and so on. Their savings are reflected in the savings you receive as a small business owner doing business with an online-only bank.

Furthermore, consider talking to your current bank about a free business checking account. Ask if there is any way that you can have one with them, perhaps by maintaining a certain balance within your account each month. While bigger banks require a more significant cash balance at all times to maintain free checking, some are happy to allow you a smaller balance to make it easier for smaller business owners to obtain a truly free business checking account.

What Small Businesses Need in a Free Business Checking Account

There’s something very important that all small business owners should keep in mind; look for free business checking accounts that work with your business. What works for the small business next door might not work for your small business if you’re in a different category. For example, businesses that do their work online only differ greatly from those that do their business in person. You might find that online free business checking is more beneficial to you if you are not a cash-based business, whereas a business that sells items to consumers with cash will not be able to find the benefit in an online free business checking account. There are always several aspects to consider when choosing the right free business checking account and the institution with which you will do business.

1. Waived fees – One of the most common mistakes that many business owners make when searching for a bank that provides them with a free business checking account is the initial fee shock. Do not let a checking account fee on a small business account deter you right away. Instead, look to see if there are stipulations that allow the bank to waive the fee if met. You might be able to find a few free business checking accounts that allow your bank to waive the fee if you meet a specific set of requirements.
2. Cash deposit requirements – Some free business checking accounts look good until you get to the fine print. For example, online banks are not big on allowing cash deposits and do not work well with businesses that do a lot of their business in cash. Others allow you to deposit as much cash as you’d like each month, but they begin to charge you fees when your cash deposits exceed a specified amount, such as $10,000. If your business doesn’t see monthly deposits that high, you’re probably golden.
3. ATM availability – This is hit or miss for all small businesses. Many small businesses have very little use for ATMs. After all, your small business is taking money and likely not spending it. However, if you find that your business does require access to ATMs on a regular basis, you will want to find out what kind of access you have. Many online banks have few ATMs available to customers – and foreign ATMs charge a fee. Local banks have ATMs locally, but do they have them in the places that you travel most often? Find out if the bank you want to open your free business checking account with offers statement credits to reimburse you for foreign ATM fees if they do not offer their own ATMs in convenient locations.
4. Online banking – If you bank with an online bank, you need not worry about this. However, you will want to check out online banking options with smaller, local banks before you commit to one. Sometimes it’s the easiest way to manage your business bank account, and small banks aren’t always as up-to-date with their online banking technology as others. This is often not a problem with larger banks.
5. Transaction limits – Are you aware that many banks limit the number of transactions each month for their business clients? What this means is that you might not be able to use your free business checking account debit card more than 100 times each month without beginning to incur fees. The fee after you exceed that number is always based on each transaction. It might not seem like a lot to pay an addition $.15 per transaction once you exceed the number allowed by your free business checking account, but it could be significant when it adds up. Let’s say your business uses 900 transactions per month and you get 200 free and each one after that costs your business $.15. Now that you do the math you’re paying for 700 additional transactions per month for a total of $105 in transaction fees each month. That’s well over $1,200 per year.

Why Look for Free Business Checking Accounts at Smaller Banks (and Credit Unions)

There is nothing like a sense of familiarity. As a small business owner, you’re perfectly aware that it’s your relationship with the people who live in your community that garner your business a good reputation and success. The same goes for hometown banks and local credit unions. They don’t have millions of customers all over the world that keep them up and running, happy to do so without a personal relationship and a sea of unfamiliar faces. Small town banks rely on you just as much as you, as a small business owner, rely on them. That’s why it’s more likely that small business owners will find free business checking accounts at small banks than anywhere else. It’s worth walking into your local bank to ask.

It might seem that the biggest benefit of banking with a small, community bank is the free business checking accounts, the smaller transaction fees and the lower deposit limits, but it’s the sense of community and the relationship you’re building with locals that really benefits you. Perhaps you’ve never considered just how well your small bank can help you – aside from free business checking accounts – so let us outline just a few of the ways that your small business bank might benefit you that you never considered:

1. Personal relationships with tellers and bank employees often leads to referrals and recommendations when new customers move to town and open an account and happen to mention to the teller or new accounts employee that they are looking for a new salon/bakery/cleaning service/lawn maintenance company
2. It humanizes your business to do business face-to-face
3. Increased chance of receiving a loan to boost your business
4. Better relations throughout the community
5. Access to more clients and business growth

It’s often the small bank owner with whom you have a personal relationship that’s going to offer you not only a free business checking account for your small business, but that much needed loan to help your business expand into a bigger business. That personal relationship often plays a huge role in the acceptance of your loan application, even though it’s technically a financial decision. It’s often the small business owners and the bank employees that get together to raise money for the community, showing their support for one another and for those who live in their communities and building their stellar reputation as they do so. It’s the small bank that offers the most in terms of customer service, growth potential and so much more. Unfortunately, there are a few downsides to free business checking accounts with smaller hometown banks.

The Downside to Free Business Checking Accounts with Smaller Banks

Smaller banks don’t have the same financial prowess as a larger bank that’s got locations and branches across the world. While you might be able to obtain a free business checking account with a small business, you might not be able to obtain some of the other perks that come along with banking at a bigger bank. For example, smaller banks are less likely to take advantage of all the latest in terms of technology to make banking easier. This might eliminate your ability to make photo deposits of checks after hours or when you are away, to bank online with the newest technology, to download a mobile app and even to receive text message alerts when your account is used. Some small banks offer some or all of these services, and some do not. It’s a chance you sometimes take when searching for free business checking accounts.

Perhaps the biggest issue with free business checking accounts with smaller banks, however, is the fact that access to funds is sometimes limited. Many smaller banks have fewer operating hours. This means you might be required to do your banking between 9-4 Monday to Friday without later access to open branches or weekend hours in which to bank. Additionally, you’ll certainly find that you have fewer options when it comes to using the ATM. It’s a good idea to consider how often your business uses the ATM for cash, how often you’re near a local ATM and how much you might end up paying in foreign ATM transaction fees when choosing a local bank with which to open a free business checking account. If these fees are too high, they’ll certainly negate the free business checking account you opened and potentially make it a better financial decision for your business to pay for business checking account so that you save money through free ATM usage with a bigger bank.

Why Look for Free Business Checking Accounts with Online-Only Banks

Online banks are pretty beneficial to many; they’re always open. There is no clock, no time sheet and no hours. You get to bank whenever you want, however you want, and you probably will not pay many fees at all. You see, when you bank with an online-only bank, you’re eliminating the middle man. This benefits you because you’re likely to receive a free business checking account without the hassle of having to find time to go into a bank, wait in line, get there before it closes and even make small talk with tellers and other people in the bank. However, you also lose the personal connection that is so important for small businesses in small communities.

Because these banks do not have much in terms of overhead, they are able to pass on significant savings to their customers. This means free business checking accounts, low fees on other items and sometimes no fees on other items. It’s here you’ll find that most business checking accounts come without ATM fees, transactions fees and minimum balance fees. What’s even better is that many online-only banks offer not only free business checking accounts to small businesses, but also free business checking accounts that are also interest bearing.

One great example of an online-only bank that will save your small business is SmallBusinessBank.com. This bank offers all businesses free business checking accounts, does not charge fees for deposits, does not require a monthly minimum deposit or balance and does not charge any type of maintenance fee for users. You’ll also receive unlimited transactions throughout the month, your own business debit card, check books and even online bill pay at no fee. And the best part is that you can open your account for a paltry $100.

The Downside of Online-Only Banking

Of course, all free business checking accounts are not created equal. When it comes to online-only banks, there are some drawbacks. Two stand out more than anything. For one, most online banks do not allow their customers to deposit cash because, well, it’s impossible. While you can take a photo of checks written to your business, you cannot do the same thing with cash to make a mobile deposit. If your business is one that does a lot of cash business, a free business checking account with an online-only bank is not going to benefit you at all since you can’t actually deposit that cash.

Another of the biggest downfalls to using an online-only bank for your business checking needs is that you do not get the personal interaction that is so important with small business and growth. You will not be working within your community, getting to know those in the community and building personal relationships with people that might be able to help your business grow with the tried and true – and almost always reliable – word of mouth.

One more potential downfall to online-only banking comes in the form of ATM access. Many online-only banks do not have their own ATMs located in many convenient places, so you will want to work hard to ensure that the bank you use has ATMs located in numerous locations in your area or that they do not charge foreign ATM fees to their customers. If your business does not use the ATM for cash withdrawals, this is not something you’ll need to worry about when choosing the best access to free business checking accounts.

Free Business Checking Accounts with National Banks

There are many benefits associated with big banking business and checking accounts for small businesses. For instance, you’ll find that you have access to more locations, more convenience and more options. Banking with large banks such as Wells Fargo, Chase, Bank of America or others like this means you will find ATMs all over the world, bank locations all over the world, and your business will never have to worry about making cash deposits. Large banks such as these used as examples are often open extended hours, too, so you never have to worry about rushing out of the office at a certain time to be at the bank before it closes. They’re often open on Saturdays to provide more hours and flexibility for their customers. Big banks have bigger budgets, too, so they’re often able to provide their customers with more state-of-the-art banking options, technical options and more.

The Downfall to Free Business Checking with National Banks

The downside to free business checking accounts with nationally located banks is a big one; most of them do not offer free business checking accounts. Instead of free business checking accounts, small businesses are offered fee-based checking accounts that are a bit expensive. However, some do offer free business checking accounts to small businesses if they are able to maintain a minimum balance at all times. The minimum balance, unfortunately, is often quite high for small businesses. The average example we’ve found is around $7500 as a minimum balance for anyone looking for a free business checking account.

If your business is able to maintain a high minimum balance, it might prove beneficial for you to bank with a larger bank to receive a free business checking account so that you can take advantage of all the other great offers and services that come with banking with a bank that has everything that customers want in their free business checking accounts.

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