There are many reasons for even the smallest businesses to have business bank accounts. For one, separating your business and personal finances can protect your personal assets. Plus, come tax time, tracking down expenses and deductions is easier with a business bank account.
But depending on the bank, you can also access important services for your company, such as business credit cards and loans. In today’s world, it can be hard to find the best bank for small businesses — from going with a big bank, opting to work with a local credit union, or even signing up for online-only institutions.
No matter what your business needs are, here are the best banks for small businesses.
Do I Need a Business Bank Account?
Whether you have a side hustle or plan to build a full corporation, a business bank account is a smart move, and sometimes, it’s legally required.
If you’re a sole proprietor, you don’t have to open a business bank account, but it can help protect your personal finances and make tax season easier by tracking spending all in one place, separate from your personal account. This is especially helpful in the event of an audit.
Even if you have an LLC, which can offer some liability legal protections, your personal assets may become vulnerable if you are sued while using one personal account for both personal and business purposes.
What Do I Need To Open a Business Bank Account?
Opening a business bank account requires more hoops to jump through than opening a personal account, but it’s worth the additional protection and services.
Here’s everything you may need to open a business bank checking and/or savings account. Keep in mind that requirements may vary by bank, so check with the bank in advance to gather the appropriate documents and paperwork.
EIN (employer identification number); a social security number will also work only if you are a sole proprietor, but filing for an EIN is free and takes just a few minutes.
Certificate of DBA if you are operating under a trade/fictitious name
Business license, if applicable
Articles of Organization or Articles of Incorporation for LLCs and corporations, respectively
Partnership agreements for partnerships
Which Is the Best Bank For Small Businesses?
Ultimately, the best bank for small businesses depends on your specific needs. Whether you just need a checking account to hold the business’ finances and track spending or you need several accounts and credit cards, you’ll want to request more information from different banks to find the best one for you. Here are some of the top banks for small businesses across the board.
1. Credit Unions
Small businesses may benefit from checking out their local credit unions for opening a business account. Credit unions typically have lower and fewer fees for business bank accounts compared to large banks, because credit unions are not-for-profit. Credit unions may also offer lower loan interest rates and better dividends for members.
Chase is a popular business bank option, especially if you’ll need business credit cards thanks to the Chase Ink credit cards as well as co-branded credit card options, all of which offer cash back programs and rewards points for business spending.
Chase offers multiple business checking account options, which vary based on the amount of money you expect to keep in the account and receive each month. The best option for small businesses is the Chase Business Complete Banking checking account. There are also two business savings account options.
Many business bank accounts have fees or limits depending on the number of transactions. So if your online business has large numbers of sales each month, even if each sale is small, you may be limited by your bank account or you could incur fees for extra transactions. Capital One may be perfect for you, as it offers unlimited transactions and cash deposits. You’ll also get a free business debit card when you set up an account.
If you travel a lot or may require business loans, Wells Fargo could be a good option for your business. Wells Fargo has great branch accessibility with over 5,000 branch locations and 13,000 ATMs across 37 states and Washington, D.C.
Wells Fargo is a top pick for business loans, too — it offers SBA loans, business lines of credit, commercial real estate financing, and more. You can also get small business insurance through Wells Fargo.
Ideal for new businesses or businesses with few transactions, US Bank offers fee-free accounts. That means it’s easier to get your business up and running. You’ll get the perks of a big bank, like a reliable mobile app and branch accessibility, with fewer fees and daily balance requirements. Just keep in mind that there are fees for overdrafts and limits on transactions, so it might not be a good fit if you expect a high number of transactions.
Best Online Banks for Small Business
Online banks offer convenience, especially for small businesses. But without a brick-and-mortar location to sort out any problems in person, it can be intimidating to find a trustworthy digital financial institution. Here are some of the top online banks for small business accounts.
Novo offers no monthly fees or balance minimums, so it’s great for those just getting started. Incoming and outgoing ACH transfers are all free, as are mailed bank checks and wire transactions. One major drawback to online banks is a lack of dedicated ATMs, but have no fear — Novo refunds all ATM transactions.
You can sign up for an online business bank account in just minutes with NBKC. This entirely online institution offers fee-free accounts with no minimum balances, no overdraft fees, a business debit MasterCard, free access to over 34,000 ATMs and unlimited transactions. NBKC also has a few brick-and-mortar locations in Kansas and Missouri for in-person customer service, although the phone and online options are top-notch.
Want to earn interest in your online bank accounts? Check out LendingClub, which offers various checking accounts for small businesses from startups to growing corporations. Balances with over $5,000 will earn 0.75% APY. Plus, business bank accounts with LendingClub have unlimited transactions and free access to a worldwide network of ATMs.
Best Banks for Small Business Loans
Sometimes, you need more capital to help your business continue to grow. If you need small business loans, consider one of these top banks.
Wells Fargo is well-known for its small business loan options, including three lines of credit, commercial real estate financing, SBA loans, and other financing products. Credit lines range from $5,000 to $500,000. Note that the highest business line of credit options will require your business to earn at least $2 million in annual sales.
Bank of America is one of the top banks for business loans with the highest amount of commercial and industrial loans compared to any other bank as of 2020. The bank offers term loans with borrowing limits up to $250,000, business lines of credit without set maximums for borrowing and SBA loans — it also offers commercial auto and commercial real estate loans.
Citibank is another great option for small business loans, especially if you feel overwhelmed by the types of loans available. The bank offers a smaller range of loans that can suit your needs. Citibank offers term loans of $5,000 to $3 million with up to 7-year terms and fixed interest rates. Citibank also offers two business lines of credit for $10,000 to $3 million.
Find the Best Business Bank For You
Opening a business bank account can be daunting, but when you find the right bank for you, it’ll make even the mundane financial aspects of business easier to manage.
Whether you want a high-tech online bank, an institution with loan options, a bank with credit cards full of reward perks, or a simple bank account to track your company’s finances, you’ll be able to find a bank or credit union to suit your needs. And if you aren’t sure where to start, consider this list of trusted financial institutions to help kickstart your research.
Originally published Oct 27, 2021 7:00:00 AM, updated October 27 2021