Online banking helps businesses streamline transactions, improve financial tracking, and enhance operational efficiency. However, with many platforms available, it can be challenging to select the right banking solution for you. At Remitly, we’ve created this resource to help you choose the right business bank account, manage it effectively, secure online transactions, and explore banking products that support growth.
Small business banking solutions
Different banks are tailored to meet different needs. Here are a few of the options to help you choose the right one for your business.
Business checking accounts
A business checking account works like a regular checking account, but it’s designed for companies. They’re suitable for businesses that handle frequent transactions, such as paying bills, receiving customer payments, managing invoices, and covering expenses.
For example, the US Bank offers checking accounts with contactless debit cards for seamless payments and helps businesses manage daily operations. Some fintech solutions like Lili and Novo also offer specialized accounts for the self-employed, freelancers, and gig workers.
Business savings accounts and certificate of deposits (CDs)
Business savings accounts and CDs offer interest-earning opportunities to grow business reserves, but they differ in flexibility and returns.
Business savings accounts are usually FDIC-insured and help businesses set aside funds while earning interest. These accounts permit withdrawals and money transfers but come with limits, making them ideal for building cash reserves.
In contrast, a CD locks the business’s funds for a fixed period of six months or a year in exchange for higher interest rates. Industry-leading banks like the Bank of America offer savings accounts and CDs that help businesses earn interest on their funds.
Cash management services
Cash management services are tools and strategies to help you track income and expenses. They ensure your business has sufficient cash flow as well as managing payments and bills, and investing excess funds.
For instance, Wells Fargo offers cash management services with overdraft protection that ensure transactions are covered even when funds are low. It also allows you to easily access and manage accounts.
Once you’ve identified the right banking solution, the next step is enrolling and managing your accounts effectively.
How to enroll and manage your business bank accounts
Setting up and managing your business accounts is an important part of organizing your finances as a small business owner.
Step one: Choosing the right bank
It’s worth researching different banks to learn about their reputation and range of services. Consider choosing a bank that matches your specific business needs and provides reliable support.
Step two: Gathering the required documentation
To open a business account, you’ll be asked to provide specific documents, including:
- Employee Identification Number (EIN): Issued by the IRS, this number identifies your business for tax purposes.
- Business formation documents: Such as Articles of incorporation or partnership agreements.
- Ownership agreements: These outline the ownership structure of your business.
- Business license: Verifies that your business is legally authorized to operate in your state.
- Proof of business address: Some banks may require proof of your business address in the same state or geographic area.
- Mobile number: Many banks request a valid mobile number for two-factor authentication.
Step three: Open the account
After selecting your bank and gathering the necessary documents, you can proceed with the account opening process. You can do this online or in-person, depending on the bank.
Step four: Manage your account
You can use the bank’s online tools to track your transactions, pay bills, and make transfers. It’s a good idea to regularly check and compare your business financial records to ensure they are up to date.
Business accounts: Features to look out for
Business accounts vary in what they offer, so it’s worth considering the specific features you need when deciding which bank is the best fit.
Flexibility in account types
Some accounts provide room for growth, such as providing options that allow you to easily add or upgrade accounts as your business evolves. Features like the ability to increase transaction limits or switch to premium accounts may be valuable as your business expands.
Multi-currency accounts
If your business deals with international clients or suppliers, a multi-currency account can help you manage transactions in different currencies. Certain business accounts let you hold, receive, and send multiple currencies, cutting exchange rates costs.
Fees and requirements
There may be significant variation in the fees associated with the account, such as monthly maintenance fees, transaction charges, and minimum balance requirements. Some banks may waive fees if you meet certain conditions.
For example, Chase Business Complete Banking has a $15/month maintenance fee but you can waive it with a $2,000 daily balance. It’s worth keeping an eye out for promotional offers that could provide fee-free banking for a limited time or cash bonuses for new customers.
Online and mobile banking
A reliable mobile and online banking platform can make it easier for you to manage your business finances effectively, with features such as a mobile app, remote check deposit, bill payment automation, and real-time account alerts.
For businesses with multiple employees, multi-user access allows you to assign different levels of banking permissions for better control.
Customer support and accessibility
When issues arise or you need assistance with transactions, responsive customer support can make all the difference. Some banks offer 24/7 support or provide dedicated business relationship managers to ensure you get a personalized service.
Customer reviews on platforms like TrustPilot can be a valuable resource while making your selection.
The role of credit cards in business banking
In addition to traditional banking options, businesses can also benefit from using credit cards.
- Expense management: Credit cards make it easy to separate business and personal expenses. This simplifies your accounting and tax preparations.
- Rewards and benefits: Many business credit cards offer reward programs, such as cash back, travel points, or discounts.
- Building business credit: Responsible use of a business credit card helps establish and improve your business credit history. This can be beneficial if you’re looking to borrow in the future.
- Employee expense management: Unlike debit cards, issuing credit cards to employees for business expenses simplifies tracking and ensures expenditure remains within company policies.
- Financial reporting and controls: Credit card statements provide detailed records of expenditure, helping with budgeting, financial analysis, and keeping control over business spending.
Online banking solutions: Security and Efficiency
Secure online banking helps protect your business’s financial data. Here are some practices to help keep your systems safe and running smoothly:
- Use secure payment gateways: Choose trusted payment processors that follow industry standards like the Payment Card Industry Data Security Standard (PCI DSS) to protect payment data.
- Set strong security features: Enable two-factor authentication (2FA) for extra security. It adds a second layer of protection, making it harder for unauthorized access even if your password is compromised.
- Regularly update security protocols: Keep your online banking systems updated to stay ahead of potential threats. Regularly applying security patches and updates helps ensure you can wire money online safely while protecting against new cyber risks and vulnerabilities.
- Encrypt sensitive data: Use encryption to protect sensitive business data during transmission and while stored. This ensures that even if data is intercepted, unauthorized parties cannot read it.
- Educate employees on security practices: Train your employees to recognize phishing attempts and follow security protocols. This reduces the risk of security breaches and helps maintain a secure system.
Managing cash flow and payments online
Maintaining healthy cash flow ensures businesses can cover operational costs, invest in growth opportunities, and navigate financial challenges with confidence.
- Create a cash flow budget: A well-structured budget that outlines expected revenue and expenses can help you anticipate financial needs. Regularly adjusting the budget ensures agility in responding to market shifts and unexpected costs.
- Monitor and reconcile accounts regularly: Frequent financial reviews help detect errors, prevent fraud, and ensure accurate reporting. Regularly monitoring transactions and setting up real-time alerts for unusual activity can catch anomalies early, protecting your financial data.
- Plan for seasonal cash fluctuations: For businesses with seasonal income fluctuations, it is a good idea to build cash reserves during peak seasons to cover slower periods. Managing inventory, adjusting expenses, and negotiating flexible payment terms with suppliers can help maintain steady cash flow all year.
To increase your financial stability, you may also be able to take advantage of banking products that provide flexibility, streamline operations, and support long-term growth.
Banking products to grow your business
The right banking products can help you manage finances more efficiently and unlock growth.
Lending and credit facilities
Access to various lending and credit options can provide the necessary capital for expansion, equipment purchases and operational needs. Common options include:
- Term loans: Traditional loans with fixed repayment schedules, ideal for major investments. Banks like Wells Fargo, Chase, and Bank of America offer competitive term loan options.
- Small Business Administration (SBA) loans: Loans partially guaranteed by US small business administration, offering favorable terms such as lower down payments and flexible overhead requirements. You can apply through lenders like Live Oak Bank, Lendio, or U.S. Bank.
- Lines of credit: Flexible credit options that allow businesses to borrow up to a set limit, making them useful for managing cash flow fluctuations. Providers like American Express Business Line of Credit and Fundbox offer accessible credit lines.
- Equipment financing loans: Loans specifically for purchasing equipment, with the equipment serving as collateral. Companies like Crest Capital, National Funding, and Balboa Capital specialize in equipment financing.
- Merchant cash advances: Advances based on future sales, providing quick access to funds but often at higher interest rates. Providers such as PayPal Working Capital, Square Capital, and Rapid Finance offer merchant cash advances.
QuickBooks and Automated Clearing House (ACH) for streamlined financial management
For businesses seeking to streamline outgoing payments, integrating ACH transactions with QuickBooks offers a cost-effective and automated solution.
- Efficient vendor and payroll payments: ACH transactions enable businesses to pay vendors, suppliers, and employees electronically, eliminating the need for paper checks.
- Low transaction costs: Unlike credit card transactions with high processing fees, ACH offers a more affordable alternative for businesses that make frequent payments.
- Seamless financial integration: QuickBooks automates ACH transaction recording and categorization, reducing manual data entry and bookkeeping errors.
FAQs
Which bank is best for an online business account?
The ideal bank for your online business account depends on your specific needs, including transaction volume, integration with e-commerce platforms, and fee structures. Some banks offer specialized services for online businesses.
For example, Novo provides a free checking account with no hidden fees, and integrates with third-party payment solutions like Stripe and PayPal.
Can I open a bank account online for my business?
Yes, many banks allow you to open a business account online. The process typically involves providing necessary documentation such as Employer Identification Number (EIN), business formation documents, and personal identification.
What’s the best bank to use for an LLC?
The ideal bank for your LLC depends on factors like transaction needs, fee structures, and additional services required. Financial institutions like Bank of America offer business checking accounts tailored for LLCs, requiring documentation like your business EIN and formation documents.
Which bank is best for a small business?
The ideal bank for a small business varies based on specific requirements such as loan needs, transaction volume, and preferred digital tools. Banks like Wells Fargo provide business checking accounts with features designed to support small businesses.
What is an online banking business?
Online banking for businesses refers to conducting financial transactions and managing accounts over the internet. This includes services like transferring funds, paying bills, and monitoring account activity.
What is the best online banking platform?
The ideal online banking platform depends on your business’s needs, such as integration capabilities, user interface, security features, and customer support. Platforms like Novo offer user-friendly interfaces, integration with various business tools, and transparent fee structures, making them popular choices for online business banking.
Can I open a business bank account with just EIN?
While an EIN is required, it is not sufficient to open a business bank account. Banks typically require additional documentation, such as business formation documents, ownership agreements, and a business license.
Can you use online banking for a business account?
Yes, online banking is available for business accounts, allowing you to manage transactions, monitor account activity, and perform various financial operations over the internet. This improves convenience and efficiency in managing your business finances.
It is advisable to consult directly with potential banks to understand their specific requirements and services to ensure they align with your business needs.