Small Business Bank

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Selecting A Small Business Bank

Priority #1: You should setup a bank account immediately for your business and consider it a priority activity. The reason is that the forms of business that provide limited liability require a separation between the business and the individual owner(s). In particular, you must not “commingle” your person and business assets. This means that you should not regular use your business account to pay for personal expenses and vice versa.

This is very important also because commingling will make the book keeping harder, your taxes harder, and it will make it difficult to clearly understand the performance of your business later. Just open the bank account immediately and be done with it.

Important: Banks often require proof of your business via articles of incorporation/organization, EIN and other things.

Evaluating a Small Business Bank:

The Website

The ability to use the bank’s website to conduct your banking is a major productivity enhancer. Be sure to check the bank’s website to see how easy it is to use. As a busy entrepreneur, at a minimum, you will want the efficiency of making payments to vendors and others via the bank’s website.

Wire Transfers

A key thing that was important to me was the ability to do wire transfers directly from the bank’s website. The reason was because I had many vendors who were located overseas and I needed to be able to send them their payments in an efficient way.

You would be surprised at the difficulty of getting a wire transfer done. Many banks, required me to go into the bank to get this done every single time I had to make a payment. And I had to make those payment regularly which always turned into a 30 minutes process. That’s way too much time to make a simple payment to a vendor and drag on my productivity.

Issues when evaluating your small business bank:

1. Minimum balances - What balances do the require to give you free services such as checking?
2. Interest rates - What interest rates do they charge and pay?
3. Service fees - What fees do they charge for having a checking account, using online bill pay, overdraft protection?
4. Credit line fee - How much does it cost to have a credit line? Many times there is an annual fee. Check what it is.
5. Checking account charge - How much do they charge for checking accounts?
6. Credit requirements - What are the requirements to get a credit card? A loan? A credit line?

Special Offeres Sometimes small business banks offer specials for new and small businesses. You should be sure to ask about this. Also check in with your local chamber of commerce as they will often know which are the best small business banks.

Know Your Banker Be sure that you get to know the one or two bank reps who work with small businesses. This is not necessarily the person you speak with when making deposits in the bank. Ask specifically for the bank person who handles business services.

By getting to know the right staff, they can help you when needed. For example, if there is a service fee that you didn’t expect, many times your banking person will be more than willing to waive it. But, you have to call them and it certainly helps if you have a relationship with them.

Keep in mind that the bank person is also trying to “sell” you. They will be looking for opportunities to add banking products to your business such as credit lines, credit cards, etc. So, they will have concern another bank will be courting you with introductory offers.

Location This is probably obvious but be sure the bank has branches conveniently located to BOTH your office and your home. You never know when you will be in the middle of tons of work and need to do some banking close to home.

Also, don’t assume that you can conduct all your business via the website. There are many times when you will need to go into the branch to resolve a dispute or sign a form. The last thing you want to do when you are in the middle of some important deal, is have to run off and sit in a bank for a half hour.

Looking Professional

I'm a big fan of maintaining a professional impression. One of the great things about banking today is that you can pay all your bills via the online websites using their Bill Pay feature.

Many people do not realize though that you can not only pay large companies this way but anyone. What this means is that you can maintain a professional appearance by paying all your vendors/contractors using bill pay and the bank will print your check, put it into a professional envelope, stamp it with a postage meter, and send it out. It’s efficient and so professional; I'm always annoyed when I cannot pay someone this way.

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