The best bank for small businesses in 2022

A person who runs a business that has fewer employees and less revenue than a company or a medium-sized company is considered to be the owner of a small business. If you fall into this category, you may be wondering where to open your business account.

The definition of SMEs is a bit looser, but SMEs tend to operate on a more limited scale with fewer employees and may not have the same resources as a company or a large company. Still, SMEs dominate the business world. According to the US Census Bureau, the majority of US companies employ less than five people, accounting for 54.4% of the company in 2018.

The COVID-19 pandemic has had a major impact on the growth of SMEs, especially online businesses. According to a survey by Venture Forward, a research initiative of web hosting company GoDaddy, the number of small online businesses launched in 2020 was 2.8 million more than the previous year. Of these businesses, 90% have less than 10 employees and about one-fifth are started by the unemployed, an increase of 8% from before March 2020.

Opening a bank account for a small business is an essential step in helping you manage your business and keep its finances tidy. If you’re a small business owner looking for a suitable business account, here’s where to get an account, what to look out for, and how one of these accounts can help.

What is a small business bank account?

Business accounts are similar to personal accounts in many ways, but with some important differences.

The employer must submit additional documents to open a business account to confirm that he / she owns the registered business. When you open an account, you’ll see the owner’s name and the name of the business associated with it.

Business accounts can incur high fees, but having them can help you ensure that your business transactions are separated from your personal finances. An account with a trade name enhances your business’s expertise and gives customers peace of mind when writing checks and making peer-to-peer payments to their business. In addition, it helps to boost a company’s credit rating.

Some banks offer tailored accounts, especially for small businesses. They may offer less complex features, limited free transactions, and low or free monthly fees.

Main statistics:

• According to a survey by fintech company Bluevine, 77% of small business owners do their own daily accounting.
• According to Nav’s 2018 Business Banking Survey, 70% of small business owners who applied for a business loan without a checking account were declined.
• According to a Nav survey, 47% of small business owners choose to open a business account at the same bank they use for their personal account.
• According to a Nav survey, most small business owners (60%) check their business accounts at least once a day.

Top banks to open SME accounts

Some banks and credit unions offer checking accounts, especially suitable for small business owners.

Here are some of the top options you can choose from, as well as the prices you should be aware of and the benefits that come with them.

Bank accounts	Monthly	Minimum balance requirement	Transaction limit	Additional features
Chase Business Complete Banking	$ 15 (Exempt if certain criteria are met)	None, but requires a $ 2,000 daily balance to waive monthly charges	Unlimited free digital transactions. 20 free transactions by teller or paper check, 40 cents per subsequent transaction	Associate debit cards available Accept credit card payments with ChaseQuickAccept Comes with fraud prevention service
Capital One Basic Business Check	$ 15 (Exempt if certain criteria are met)	$ 250 to open and $ 2,000 per day to waive monthly fees	Unlimited free digital transactions	Free business debit card
Bethpage Federal Credit Union Free Business Check	none	none	Unlimited free transactions	Earn 0.20% APY Free business debit card
Axos basic business check	none	none	Unlimited free digital transactions	Comes with a free set of 50 checks Unlimited domestic ATM fee refunds
LendingClub Tailored Check	$ 10 (Exempt if minimum balance is met)	None, but requires a $ 500 daily balance to waive monthly charges	$ 10,000 for incoming transactions and $ 10,000 for outgoing transactions per day	Earn 0.50% APY for up to $ 100,000 and 0.10% APY for more balances Unlimited domestic ATM refunds
US Bank Silver Check Package	none	$ 100	125 free transactions per month, 50 cents per subsequent transaction	50% discount on first check order up to $ 50 Comes with a check fraud prevention tool

Benefits of Small Business Bank Accounts and Why You Need to Get It

There are four main benefits of having a business account for your small business listed by the US Small and Medium Business Administration:

• protection
• Professionalism
• Preparation
• Purchasing power

Keeping your business account separate from your personal account helps prevent business transactions from being lost or confused with personal transactions. Putting all your business transactions together in one place makes it easier to track expenses and look for errors. Moreover, in the face of a personal financial crisis, it does not adversely affect your business’s credit score.

Business accounts help give your company a more professional image. Clients can write checks to their business rather than to their personal accounts. Having a professional account may also mean securing a better deal for your business, at least approved for a business loan. 70% of business owners will be denied a loan if they do not have a business account. Having one of these accounts can seriously impact your ability to cover business-related costs.

The US Small and Medium Business Administration states that business accounts often come with credit options to help business owners prepare for emergencies. For example, US Bank offers businesses four types of credit lines to help manage cash flow, protect against overdraft fees, and purchase materials.

Business accounts can also give owners more purchasing power by establishing a good credit history. Another bank account comes with another business credit score that lenders use to assess the creditworthiness of their business. Better credit may provide access to more funds.

One of the last benefits of having a business account is taking advantage of tax credits. Reporting a business tax credit from your personal account may trigger an audit. Tax deductions for some valuable small businesses include utility costs, inventory costs, and interest on loans.

SME checking accounts and SME savings accounts

A checking account is essential for managing your business’s day-to-day expenses and transactions, but it’s also a good idea to open a business savings account to save your whimsical and unnecessary revenue. The money in your business savings account can be used as an emergency fund or as a savings for large future expenses.

Business savings accounts also have other benefits that are not offered by business checking accounts, such as increased annual interest rates (APY). However, if you do not meet the minimum balance requirement to avoid fees, it may not be worth it.

Below is a breakdown of the different uses and benefits between checking and savings accounts.

SME checking accounts	SME savings account
Mainly for daily transactions	Mainly for storing funds
Lower APY (and often interest-free)	Higher APY that may be part of your investment strategy
Check write permission	Withdrawals per month are limited (usually 6 times)
Higher liquidity as it allows for frequent transactions with debit and credit cards	Suitable for saving for future costs and emergencies

Frequently Asked Questions

• There are many benefits to opening a business account. They give your business professionalism, meet your funding needs, and make it easier to track your business transactions and build your business’s credit score. All these benefits can open up better opportunities for your business, such as getting the best business loan.

• Different business accounts are suitable for different needs. There may be a minimum balance requirement imposed by your bank to avoid monthly charges — look for a minimum balance account that you know you can meet. Many accounts also have trading restrictions. Depending on the size and needs of your business, it is important to consider the number of transactions you expect and whether you can afford to pay your bank’s transaction fees. You may come across a variety of unique features offered by different accounts. As an ATM refund or enhanced fraud prevention service. These additional features may be more or less important, but they may come with specific requirements to make them available to your customers.

• You don’t necessarily have to have both a business checking account and a business savings account, but it can track your spending and give you an incentive to save extra income. Business checking accounts are primarily used for frequent daily transactions, while business savings are primarily for immediate storage of unwanted money. You are more likely to need a checking account. Still, if you have additional income that you can save for future costs or emergencies, it is advisable to have a business savings account. Business savings accounts also tend to offer higher APY, which helps boost your savings.

• First, you need your Federal Employer Identification Number (EIN). EINs are required for business validation and tax management. If your business is a sole proprietor, a social security number will suffice instead of EIN. Other documents that banks may request include:

  • Business formation document
  • Ownership agreement
  • Business license
  • Personally identifiable information such as passports and driver’s licenses.

  Finally, if your account requires a minimum deposit, you may need an initial deposit.

Conclusion

Millions of new businesses are opened each year, and they play an important role in the economy. Most of these small business owners handle their business accounting themselves. You can take all the responsibilities of running your business and find a business account that meets your business needs to help you manage your finances smoothly.

It is important for small business owners to open a checking account that can be used to send and receive payments under a trade name and to make business loans. When searching for the right business account, look for the fees, transaction restrictions, and features that your account offers.

You can also open a savings account for a small business, depending on your business needs and profits. Make sure you meet the minimum requirements to avoid paying a monthly fee.