As your business grows, it’s ideal to establish yourself as an entity. But to do so, you must set yourself apart from your company, including the bank account you use.
Having a small-business bank account separates your personal and business expenses, making it easier to organize your finances and prepare for taxes.
However, it’s important to choose an institution that fits your business goals and needs. There are a variety of online and brick-and-mortar options for small businesses —– here are the top things to look for and a few good choices.
4 things to look for in a small-business bank
Don’t rush shopping for a business bank account — make the wrong decisions, and you risk uprooting everything down the line. Switching bank accounts midyear is an unnecessary headache that can complicate tax preparation. So take your time and analyze the pros and cons of each before deciding.
But how will you know when you’ve found “the one”?
Here are several ways to tell if it’s a good match.
1. Fast (and cheap) to open a new account
You have a business to run — there’s no time to waste on lengthy applications and processing times. Thankfully, many banks today offer fast approvals, allowing you to set up your account online within minutes.
And if it requires little to no money to open your account, even better.
2. Easy to integrate your accounting software
Using accounting tools like FreshBooks and Xero? Then having a way to link your new bank account will prevent hiccups in your bookkeeping process. Many small and large banks offer this. For example, Bank of America and US Bank integrate with QuickBooks.
3. Nearby locations and great app features
It’s ideal to be able to withdraw or deposit cash whenever you want, so you can conduct cash transactions if needed. That means banking with an institution that has plenty of ATMs and branch locations in your area.
An app with excellent features can sometimes make up for this by allowing mobile check deposits.
4. Good cash-flow minimums and maximums
Some banks require small-business owners to maintain a specific amount in their account each month. Go below and risk paying hefty “maintenance” fees. Then others have a maximum amount you can add to your account each day.
James Diel, founder and CEO of Textel, advises entrepreneurs to keep their expected monthly cash flow in mind when choosing a bank.
“Find an account that doesn’t cap the maximum or minimum withdrawals in a way that’ll negatively impact your business or add a mountain of overage fees onto your account maintenance costs,” says Diel. “Since cash flow changes as your business grows, evaluate your needs annually to ensure your account is still the best fit for you.”
Local vs. national banks: Which is better?
The great debate remains: Is it better to open an account with a local or national bank? The answer isn’t so simple, since it depends on various factors.
If you travel frequently and need to walk into a branch wherever you are in the country, then a national bank with lots of physical locations could be a better fit.
But that is one example — here are the pros and cons of each type.
Pros and cons of local banks
A local bank consists of credit unions, minority-owned banks, and others with a few locations in a city, state, or region.
Pros
- Great customer service, since employee retention is higher, allowing them to get to know each client
- Flexible lending — local banks are less restrictive and put trust in the business owners they know
- Lower ATM and monthly fees
Cons
- Limited branches and ATM locations
- Fewer financial services and smaller loan sizes
- Less stability, especially during economic downturns
Pros and cons of national banks
A national bank is usually owned by a large corporation and has many branches across the country or even the globe.
Pros
- More accessible with branches and ATMs across the nation
- Advanced technologies, such as mobile apps and online banking
- More financial services and loan options, such as financial advisers for investing and brokering
Cons
- Customer service isn’t as great, since employee turnover is higher and you can visit multiple locations, which means no relationship building
- Higher interest rates for loans
- Stricter regulations, making it harder for new businesses to get loans
Which you choose depends on your personal preferences as a founder. For example, Rafael Romis, founder of Weberous Web Design, found that customer service was the key to his business.
He initially banked with Chase for several years and was happy overall. But things changed after covid hit.
“A friend recommended a smaller local bank (California Bank & Trust) which, according to him, was processing loan requests much faster due to their focus on service,” says Romis “We went in and met with them, and the rest was history. We switched over and never looked back. We found that working with a business bank that knows you on a first-name basis and can create a custom service offering according to your needs gave us a great edge we never knew was possible.”
Top 8 banks for small businesses
There are over 4k FDIC-insured banks in the US, giving you plenty of options to choose from. Here are a few good choices for every kind of venture.
1. Chase for Business
A multinational brand, Chase offers three business accounts:
- Chase Business Complete Banking
- Chase Performance Business Checking
- Chase Platinum Business Checking
The best option for small-business owners is the Chase Business Complete Banking account because the others require you to maintain a balance of $35k and $100k.
Pros
- No minimum to open an account, and you can waive the monthly service fee by maintaining a $2k daily minimum balance
- Over 4k branches and 16k ATMs in 48 states
- Get $300 for opening a new business checking account (must deposit $2k or more within 30 days)
- Business credit card and loan options
- Online banking using the Chase mobile app
Cons
- Has a $15 monthly service fee if you don’t maintain a minimum balance of $2k
- Fees for cash deposits after reaching $5k monthly limit
- Only 20 free transactions in a branch per month
- Overdraft fees are high
2. Wells Fargo
One of America’s largest banks, Wells Fargo offers three account options for small businesses:
- Initiate Business Checking ($10/mo. or free with $500 minimum daily balance)
- Navigate Business Checking ($25/mo. or free with $10k minimum daily balance)
- Optimize Business Checking ($75/mo., which covers up to five linked accounts)
Pros
- 5k branches and 13k ATMs in 37 states plus Washington, DC
- Offers SBA loans, business lines of credit, and commercial real estate financing
- Has mobile-app banking
- Provides business insurance options
- Offers HR services like automated payroll and tax deductions, and AI error detection
Cons
- Limited terms for business loans
- No free business checking account options
- Number of free ATM transactions are limited (100 or 250 per account, then $0.50/each)
3. Novo
Novo is a highly rated FDIC-backed online bank catering specifically to business owners. It’s popular among freelancers, consultants, and ecommerce sellers. However, it also attracts new small-business owners across industries, especially since it only requires $50 to open an account.
Pros
- No monthly fees or balance minimums (it even refunds all ATM fees)
- User-friendly mobile app with remote check deposits
- Customer service powered by people (not AI)
- Exclusive perks worth thousands of dollars (including cash-back perks from Stripe, HubSpot, and Google Ads)
- Integrations with Slack, Shopify, and QuickBooks (and others)
Cons
- No physical branches you can visit
- Impossible to send wire transfers
4. NBKC Bank
NBKC offers a free business checking account that requires no minimum balance, and charges nothing for check deposits. It also boasts free access to over 34k ATMs and unlimited transactions.
Pros
- No overdraft fees
- Live customer service support via online and phone
- Offers additional services like invoicing, collections, payment disbursements, and fraud management
- Commercial lending options for online small businesses, equipment, line of credit, real estate/construction, and SBA loans
- Earn interest on entire balance (compounded daily and paid monthly)
Cons
- Only a few physical branches in Kansas and Missouri
- Limited hours for customer support
- No solutions for overdraft protection
5. Axos
Axos is an online-only bank with a free business checking account called Axos Basic Business Checking. It also offers business loans, CDs, and savings accounts. Or you can opt for the Axos Business Interest Checking (requires a $5k minimum daily balance to waive the $10/mo. fee).
Pros
- No monthly service fees or minimum deposit requirements
- Integrations with QuickBooks
- Unlimited transactions
- Refunds for all out-of-network ATM withdrawal fees
- Cash deposits using Allpoint and MoneyPass ATMs
Cons
- Only 200 transactions per month are free
- No physical branches
- Charges $50 for international wire transfers
- Requires a $1k deposit to open new account
6. US Bank
US Bank is a smaller national chain with a fee-free business checking account, plus perks you’ll typically find with bigger banks.
It offers three business account options:
- Silver Business Checking Account ($0 monthly fees, 125 free transactions per month)
- Gold Business Checking Account ($20/mo. service fee, 300 free transactions per month)
- Platinum Business Checking Account ($30/mo. service fee, 500 free transactions per month)
Pros
- Mobile banking and branch locations in 26 states
- Low minimum deposit to open a new account
- Offers various CD terms
- Online and mobile banking
- Has other business services, like business loans, lines of credit, and credit cards
Cons
- Some checking and savings accounts have monthly service fees
- Savings accounts have low-interest rates
- Early withdrawal penalties for CDs are high
- Has only 125-500 free transactions per month
7. Bank of America
Already have a personal account with BofA? Then opening a Business Advantage Checking account (two options: Fundamentals or Relationship Banking) isn’t a bad option. This will make it easier to transfer funds to and from personal accounts.
Pros
- Top bank for commercial and industrial loans (SBA loans, borrowing limits up to $250k, business lines of credit without set maximums)
- Physical branches and ATMs across the country
- Zelle for business (to send money to friends, family)
- Cash-flow monitoring and projections
- Account management option to enable employee access, plus integration with QuickBooks
Cons
- Must maintain a $5k combined average monthly balance or spend at least $250 in debit card purchases each month to avoid a $16/mo. service fee
- Fees for incoming wires and stop payments
- Savings account has a $10/mo. service fee
8. Capital One
Capital One is an excellent choice for small-business owners with a large number of sales monthly. Some banks charge fees after reaching monthly transaction limits, taking away from your bottom line.
There are two business checking account options:
- Basic Checking ($1/fee for every $1k deposited after reaching $5k monthly limit)
- Unlimited Checking (no fee for cash deposit, but higher monthly fees)
Pros
- No opening deposit required
- Free domestic wire transfers for Unlimited Checking
- Over 70k ATMs nationwide
- Overdraft protection
- Mobile banking and online bill pay
- Business credit card options with cash-back rewards\
Cons
- Minimum balance needed ($2k to $25k, depending on account) to waive monthly fees
- Only has physical branches (and Capital One Cafes) in certain states
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