What Type of Business Bank Account Do I Need to Secure Working Capital

by | Jun 22, 2022 | Financial Advice, Insights To Business

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Business bank accounts are essential for small business owners. They keep the assets of the business separate from the owners’ personal holdings. With all of the business money and assets in certain accounts, it is easy to file taxes for the company. There are many types of business bank accounts with each one serving its own purpose and allowing the business to grow and thrive. The four primary types of accounts help small business owners manage their money and make the most of every dollar it takes in.

Business Checking Account

Business checking accounts help you to build a credit profile for your business. It also allows you to pay your bills with a check that has your business name on it. This is beneficial when you are paying your utilities and establishing yourself as a business entity. You are also able to purchase inventory and supplies directly from the business checking account. Business accounts may charge a variety of fees, including transaction limit fees, deposit fees, and maintenance fees. Many of these fees can be written off on the business’ taxes.

Business Savings Account

A business savings account is a great way to put away extra money the business earns. By saving any excess money and setting it aside for the future, will lay the foundation for financial stability. Saving liquid assets in a business account shows financial responsibility. It also offers a higher interest rate than a checking account. Business savings accounts are subject to the same type of fees as a business checking account. Withdrawal fees and minimum opening deposit fees may also be charged. Opening both a business checking and business savings account makes it easier to save money using a simple account to account transfer.

Cash Management Account

Online banks offer cash management accounts for businesses that will be depositing large sums of money. Because of the large transactions, these banks often require a much higher minimum daily balance. This type of account is beneficial if a business is seeking working capital. A cash management account will pay a higher interest rate than other types of business accounts, but they may not offer all of the services of the checking account you have with your local bank.

Merchant Services Account

A merchant services account is one that is set up when you use a service that allows you to take credit card payments. This type of account is linked with your other business accounts so you can transfer your credit card revenue into whatever account it needs to be in. There are several fees associated with a merchant services account. They include batch fees, transaction fees, and minimum transaction fees. Choose your merchant services provider wisely. There are several to choose from and are quite competitive when it comes to fees. Having the right types of business bank accounts will make it easier to gain the working capital you need if an emergency arises. Access to the right type of funding will help you keep your business growing. Opening your business accounts early will get you on the right track and allow you to achieve your goals much faster.