New freelancers, contractors, and startup owners have a lot on their plates. From determining 1099 forms and tax deductions to selecting a business structure, the options can seem limitless — and stressful.
One of the most stressful decisions is deciding which bank to entrust with your money.
Bank accounts for small businesses typically have terms and features that are vastly different from those used to manage your personal finances.
This post will explain how to select the best bank for your small business in 2023. We also highlight the 6 best banks for small businesses to show you what’s available!
What is a Small Business Bank Account?
In many ways, business accounts are similar to personal accounts, but there are some key differences.
To open a business account, a business owner must submit additional paperwork to prove that they own a registered business. The account will be opened in the owner’s name as well as the name of the business associated with it.
While a business account may have higher fees, having one ensures that business transactions are kept separate from personal finances. An account with the business name attached to it can boost the company’s professionalism and make customers feel more comfortable writing checks or making peer-to-peer payments to the company. Furthermore, it can help improve the company’s credit rating.
Some banks offer accounts designed specifically for small businesses. They may include fewer complex features, fewer free transactions, and lower or no monthly fees.
Do I Need a Separate Small Business Bank Account?
That is determined by the size of your business.
If you’re starting a formal business with employees and a physical location: Yes, without even a doubt.
A business checking account, on the other hand, is usually more trouble than it’s worth for independent contractors, freelancers, and other 1099 workers. You are free to continue using your personal account.
But what about tracking business expenses?
Many people will tell you that you need a separate business account if you are self-employed. The main advantage they cite is the ability to track business expenses.
This is not a bad plan. However, there are simpler ways for independent contractors to keep track of business purchases! Keeper Tax, for example, scans your transactions, marking the ones relevant to your business and ignoring the rest.
This allows freelancers (particularly those with side hustles) to be more agile. They won’t have to worry about keeping their personal and business finances separate.
Which Bank is Best for Opening a Small Business Account?
If you do require a separate business account, you should be aware of your options.
We combed through the terms of 14 major banks, evaluating their suitability for small businesses.
There is no “best” bank for every business. It will always be determined by the specific requirements of your company.
A well-established business, for example, may not need to worry as much about obtaining a business loan as one that is just getting started. On the other hand, it must keep a close eye on how many free transactions it receives each month!
Use this handy table to find the right bank for your business. Check out the summaries below to learn more about each financial institution, including what additional features they offer for small businesses
1. Capital One
Best if: You plan to make a lot of business purchases
- Maintenance fees: $3-15/month
- APY: 0.2% (first year only)
- Transactions per cycle: Unlimited
- Deposits per cycle: $5,000
- Interest-earning checking account? ✘ No
Capital One is famous for its 2% cash back Spark Visa credit card.
Between that and its unlimited free transactions per monthly cycle, Capital One is a solid choice for high-activity businesses looking to earn back some of their expenses.
2. Wells Fargo
Best if: If you do business all across the country
- Maintenance Fees: $5-$75/month
- APY: 0.01%
- Transactions Per Cycle: 100-250
- Deposits Per Cycle: $5,000
- Interest-earning checking account? ✓ Yes
One of the most popular banks for small business loans, Wells Fargo offers many different account types and lines of credit for businesses to choose from.
That, plus its extensive networks of branches and ATMs, makes it a top-notch choice for businesses of all sizes.
3. Chase
Best if: You’re a retailer looking to scale up
- Maintenance fees: $15-$30/month
- APY: 0.01% -0.02%
- Transactions per cycle: Data Not Available
- Deposits per cycle: Data Not Available
- Interest-earning checking account? ✘ No
Chase Bank is best known for its high-reward credit cards, but they also offer small business lending and merchant services.
With a nationwide network of branches and ATMs, Chase has established itself as a go-to bank for businesses.
4. Citibank
Best if: You need a big bank with solid mobile support
- Maintenance fees:$15-$22/month
- APY: Data Not Available
- Transactions per cycle:200-500
- Deposits per cycle:$10,000-$20,000
- Interest-earning checking account?✓ Yes
Citibank is another long-standing traditional bank with numerous international branches. Global Finance Magazine named Citibank the best bank for mobile cash management, so it’s a good option if you want access to cutting-edge digital tools.
They are also known for being the best bank for payments and collections.
5. Axos Bank
Best if: You’re looking to grow your account through interest alone
- Maintenance fees: $0-$10/month
- APY: 0.81%
- Transactions per cycle: 100-Unlimited
- Deposits per cycle: Data Not Available
- Interest-earning checking account? ✘ No
It’s famous for its 0.8% APY on their Business Interest Checking account. The low fees are a high-quality bonus too. Keep in mind: It’s a fully online business, with zero brick-and-mortar locations for you to visit in person.
Unless you want local branches, Axos Bank is a solid choice for high-yield account lovers.
6. First Citizens Bank
Best if: You’re a Southern business looking for loans
- Maintenance fees: $0-$25/month
- APY: Data Not Available
- Transactions per cycle: 150-500
- Deposits per cycle: $5,000
- Interest-earning checking account? ✘ No
While First Citizens isn’t available everywhere, it ranks as one of the top two large banks featured here in terms of how much money it funnels into small businesses. Almost 28% of this bank’s portfolio centers on small business loans.
What Should a Small Business Look for in a Bank?
Self-employed individuals and small business owners have distinct banking requirements. However, your requirements may differ depending on your industry, the size of your company, where you are located, and your level of technological sophistication.
These are the main things you’ll want to consider when opening a business bank account:
- Minimum balance requirements
- The number of free transactions and deposits you get per statement cycle
- A high Annual Percentage Yield (APY)
- Low monthly maintenance fees
- The quality of their mobile app and online banking services, for features like mobile check deposit
- Access to customer service
- Low-interest rates
- High cashback rates on business credit card
- Ease of opening a business bank account
- Whether you want brick and mortar bank or prefer an online platform
- Low foreign transaction fees for business outside the US
Don’t be afraid to inquire about your specific business requirements. After all, no one knows your company better than you!
Any reputable bank will gladly address your concerns. If they aren’t, you should know before you open the account.
The one universal consideration is that all bank accounts, especially business accounts, should be FDIC-insured. If you want to open an account and it isn’t available, run away and don’t look back.
Are Small Banks Better for Small Businesses?
Yes, on average.
Small banks are far more likely than larger banks to approve small business loans. They understand the community’s needs, and they will evaluate loan requests using a human analysis rather than a cold algorithm.
Of course, size isn’t the only consideration. There will always be bad small banks and good big banks; therefore, don’t open an account with a bank just because it’s small. Before signing any documents, always read the terms, conditions, and fees.
Which Business Bank Account is Best for LLCs?
The best business bank account for your LLC will depend on your LLC’s needs and budget.
As a small business, you will want to ensure that your business checking account offers a high number of features, a low — or ideally no — account monthly fee, and low transaction fees.
If your LLC works with international freelancers and/or businesses, you will also want to prioritize a business checking account that does not charge any fees for international wires.
Do I need a Small Business Accountant?
Even though you may not necessarily “need” a small business accountant, you will definitely benefit greatly from hiring and working with one.
An accountant can save small business owners thousands of dollars on taxes. They can also ensure that your business’s bookkeeping is effectively managed, including your payroll.
This can save you a huge amount of time, which you can then invest into other more important aspects of your business
Conclusion
Business bank account features can range widely, from sign-up bonuses to simple cash deposits. Before deciding where to bank, consider all of the factors.
Whatever perk or feature is most important to you, having the right business bank account is critical to the success of your company. This is the account where you make deposits and pay your expenses.
And, as your company grows, it’s a good idea to review your business bank account every year. Pay attention to the transaction limits, fees, restrictions, and benefits to ensure that the account you used yesterday is still the right one for your business today—and tomorrow.
