Having an account with a reputable and reliable bank is one of the most important aspects of starting a business. Whether you operate in the Business to Business (B2B) or Business to Customer (B2C) industry, sell online, offline, or both, it’s important that your company has a stable account where monies can be paid in and out. Whether you are in need of a simple, basic checking account or require a more complex product such as an account with an overdraft facility or other lines of credit, there are many factors to take into consideration before you take the plunge.
When making the decision regarding your business checking account, it’s not only important to consider your current pertinent company needs – you should also take into account your expected business needs for the future. This is especially true if you expect to be in the market for a business loan in the future; choosing a bank which you can build a good relationship with will potentially make this an easier process.
So, what must be considered when opening a new business checking account? We’ve got the details.
Table of Contents
#1. Your Business Needs
First and foremost, your business’ individual needs must be the highest priority when selecting any company banking products. Are you looking for basic products, or do you require a more specialized service, for example a small business loan or assistance with investments? In addition, you should also consider the amount of cash flow that you expect to be moving in and out of your company. Don’t just think about your current cash flow – this is especially important if your business is currently in the early stages, and is likely to see an increase in revenue in the near future.
You should also consider any costs; some banks charge a monthly or yearly fee, whilst others such as this free checking account NJ will not incur any additional business costs. Before selecting a paid account, bear in mind whether the services offered are worth the investment. For example, a bank that provides a financial advisor to you is certainly worth thinking about spending more for.
#2. Comparing Features
Before you can know that you’ve made the right decision when it comes to a bank, you will need to determine your business needs and requirements. Once this is done, you can then begin to compare the various features offered by different banks to enable you to find the best match.
For example, you may have quite simple needs – perhaps your business is run mainly online, and you need a checking account that provides you with easy, instant online access to your money. In this case, you may want to consider using online banks, many of which provide much the same features as traditional high street financial institutions. On the other hand, if you want to bank with an institution where you’ll be able to visit a branch and speak with an advisor, an online bank may not be an ideal choice for you.
In addition, you should also look into any specific features aimed at entrepreneurs. Don’t forget to also take into consideration factors such as interest rates, fee structures and additional customer services in relation to how they meet your business needs.
#3. Lending and Credit
Even if you aren’t currently thinking about applying for a business loan, it’s important to consider the ease of borrowing from your chosen bank in the future. At some point during your entrepreneurial career, it is likely that you may need to apply for a line of credit, whether this is a loan to help with start-up costs or a credit card to assist with covering regular business expenses.
In most cases, smaller financial institutions are a better choice in terms of future lending ability. Larger banks tend to be clamping down on credit; entrepreneurs with a less-than-perfect credit rating are often left disappointed. On the other hand, smaller banks are usually more likely to accept applications for credit from companies in their local area.
#4. Future Re-evaluation and Flexibility
The main things that you need from a bank now aren’t permanent; just a few years down the line you may find that your business’ financial needs are significantly different from what they once were. Because of this, it is important to factor in flexibility and determine how well your bank will be able to adjust to your company’s changing needs over time.
For example, you should determine how easy it would be to switch checking accounts, take out additional features and services, or borrow more credit in the future.
Would you like to add to this list? Share your top tips in the comments below.
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