Business checking and savings accounts help entrepreneurs manage cash flow, ensure tax compliance, and maintain financial stability. But with so many options available, choosing the right one can be confusing, especially for new business owners.
At Remitly, we’ve created this resource to help you understand the differences between these accounts, highlight their key features, and provide practical tips for selecting the right option for your business.
Comparing business checking and savings accounts
Business bank accounts are divided into two categories, each serving different financial needs:
| Feature | Business checking account | Business savings account |
| Primary use | Daily transactions (payments, deposits, and withdrawals) | Stores surplus funds |
| Transaction limits | High or unlimited transactions for business operations | Limited withdrawals per month to encourage savings |
| Interest earnings | Doesn’t typically earn interest | Earns interest on deposited funds |
| Fund access | Instant access | Restricted access to promote savings |
| Fees and balance requirements | May charge maintenance fees. Balance requirements depend on the account. | Often requires a minimum balance for fee waivers |
Each account type plays a key role in managing finances. Let’s break down their features.
Business checking accounts
A business checking account is used for frequent transactions, allowing companies to manage daily financial activities such as receiving payments, processing payroll, and paying vendors.
Key features
- Seamless transactions: Businesses can easily deposit and withdraw. Understanding transaction limits helps businesses keep costs under control.
- Diverse payment options: Supports Automated Clearing House (ACH) transfers, wire transfers, and check transactions. Many checking accounts support in-store payments via card readers, mobile tap-to-pay, and payment processors like PayPal, Stripe, Square, and Zelle for fast bank-to-bank transfers.
- Integrated digital tools: Real-time transaction alerts, budgeting tools, and integration with accounting software enhance financial tracking and management. These features help you monitor activity and manage your money online.
Business savings accounts
A business savings account helps companies store excess cash, build a financial safety net, and encourage disciplined saving. Savings accounts are ideal for long-term reserves rather than everyday transactions.
Key features
- Interest earnings: Business savings accounts earn interest, often expressed as APY (Annual Percentage Yield), with higher balances sometimes getting better rates. This helps businesses grow their reserves while keeping funds secure.
- Automated savings: Some accounts allow businesses to automate transfers from checking to savings, ensuring steady financial growth.
- Withdrawal limits: Many banks have monthly withdrawal limits to encourage businesses to save for emergencies or future investments.
- FDIC protection: Most business savings accounts are insured up to $250,000 per depositor, per bank, per ownership category, protecting funds in case of a bank failure.
With a clear understanding of how business checking and savings accounts work, the next step is choosing the right one for your company’s needs.
Choosing the best account for your business
Choosing the right account depends on your business transaction needs and financial goals. Consider the following factors when deciding between business checking and savings accounts.
Criteria for selecting business checking accounts
- Transaction volume: Businesses with frequent transactions benefit from accounts with low transaction fees or high free transaction limits in order to reduce costs. Some banks even offer unlimited transactions. Those with lower-volume, irregular expenses may find a basic account more suitable.
- Industry-specific solutions: Choose a bank that offers business checking accounts tailored to your industry. For example, Wells Fargo and Chase offer accounts with add-ons for industries like e-commerce, healthcare, and real estate, which may include features like mobile deposits, efficient payment processing, or industry-specific benefits.
- Multi-currency accounts: Businesses involved in international trade may benefit from multi-currency accounts often offered by international banks. These accounts allow holding and transacting in different currencies.
- Customer support availability: Ensure the bank provides reliable customer service, including things like dedicated banking support, 24/7 assistance, or access to a business banker or relationship manager.
Factors for business savings accounts
- Saving goals: Choose a savings account that aligns with your financial objectives, whether you’re building an emergency fund or planning business expansion.
- Accessibility needs: If frequent withdrawals are necessary, consider an account with minimal transfer fees. Ensure the account offers convenient access to funds and faster processing times.
- Risk management: A business savings account can serve as a financial cushion during downturns or unexpected expenses. Accounts with competitive APY rates provide financial security.
- Integration with business checking accounts: Most banks let you link a checking and savings account. A savings account that links smoothly to your business checking accounts makes transferring funds and managing cash flow simple.
Managing business accounts effectively: strategies to optimize cash flow
Cash flow is the core of any business. Poor management can lead to financial struggles, making it difficult to cover expenses and grow. Managing accounts effectively ensures financial stability. Here’s how to optimize cash flow and keep your business running smoothly:
Keep business and personal finances separate
A dedicated business checking and savings account simplifies financial reporting and keeps company funds organized. Mixing personal and business transactions can lead to accounting headaches and unexpected issues. Keeping your finances separate makes bookkeeping easier, improves liquidity tracking, and reduces audit risks.
Stay on top of account balances
Regularly monitoring account balances helps prevent overdrafts and avoid costly charges. Proactively managing your account online reduces unnecessary costs and supports long-term financial stability.
Accelerate payments and minimize delays
One of the biggest cash flow challenges is waiting for payments. Delayed invoices and slow payment methods can create financial stress. To improve cash flow, businesses can offer multiple payment options, such as credit cards, ACH transfers, and digital wallets, where applicable.
Automated invoicing systems can also help by sending payment reminders and offering early payment discounts to encourage faster transactions. This will reduce wait times and help you maintain a steady revenue stream.
Control expenses and automate bill payments
Managing expenses effectively is just as important as increasing revenue. Unnecessary spending can strain cash flow. Automating bill payments ensures that expenses like rent, utilities, and vendor payments are made on time.
Regularly reviewing expenses can also help identify areas where you can reduce or eliminate costs.
Use business credit for short-term cash flow needs
Even with faster payments, businesses can still face cash flow gaps due to seasonal slowdowns. A business credit card or line of credit can act as a safety net, covering short-term costs without draining your cash reserves.
Choosing a credit option with preferred rewards or cash back can also turn necessary spending into financial advantages. Some business credit cards offer rewards, such as cash back on office expenses. However, careful management is key to avoiding excessive debt that could affect long-term stability.
Integrate accounting software for better cash flow management
Manually tracking cash deposits and cash flow can increase the risk of errors and missed financial opportunities. Integrating accounting software with business accounts simplifies financial management by providing real-time insights into income and expenses.
Platforms like QuickBooks, Xero, and FreshBooks help businesses categorize transactions, track liquidity trends, and generate reports for better decision-making. A clear view of where money is coming from and going ensures smarter financial planning.
Review financial statements regularly and plan ahead
Managing cash flow isn’t just about tracking today’s numbers; it’s about planning ahead. Regular financial reviews, including analyzing transactions within each statement period, help businesses anticipate expenses, spot seasonal trends, and prepare for future investments.
Forecasting tools like Float and PlanGuru, along with cash-flow projections, provide insights that ensure businesses have enough funds to operate smoothly throughout each statement cycle.
By implementing these strategies, you can build a stable foundation for long-term business growth. Effective account management involves keeping money in the bank and making smart financial decisions that support daily operations and future success.
Considerations for small-business owners
Beyond opening an account, there are several factors to consider in order to make informed banking decisions.
Balancing costs and benefits: monthly maintenance fees and more
For small businesses, every dollar matters. Banking fees may seem minor, but they can add up over time.
Understanding monthly maintenance fees
Most business accounts come with a monthly maintenance fee, typically ranging from $5 to $30 but sometimes higher. Many banks allow you to waive these fees by:
Maintaining a minimum daily or monthly balance
Some examples:
| Chase Business Complete Banking | $15/month | Waived with a $2,000 minimum daily balance, among other conditions |
| Bank of America Business Advantage Fundamentals | $16/month | Waived after 12 months with a $5,000 combined average monthly balance |
| Wells Fargo Initiate Business Checking | $10/month | Waived with a $500 minimum daily balance |
Meeting transaction or deposit requirements
- US Bank Silver Business Checking account package (no monthly fees but limits free transactions).
Enrolling in additional banking services (such as merchant processing)
- Square Banking Business Checking account (no monthly service fees, but designed for businesses using Square payments).
- PayPal Business Checking account (no monthly fee, but benefits businesses using PayPal for transactions).
Avoiding unnecessary fees helps keep more of your earnings in your business instead of paying for banking costs.
Other costs to consider
- Transaction fees: Some banks charge per transaction once you exceed a set limit. If your business frequently deposits, withdraws, or transfers money, review the bank’s disclosures on fees carefully.
- Overdraft and non-sufficient funds (NSF) fees: Running low on funds can lead to costly NSF or overdraft fees. Look for accounts with overdraft protection to avoid unexpected charges.
- Wire transfers and ATM fees: If your business relies on international or domestic wire transfers, compare bank fees. If cash access is a priority, choosing a bank with a large fee-free ATM network (like MoneyPass) can help reduce withdrawal fees.
Choose an account that provides value without high costs. If a slightly higher fee includes useful features like digital accounting integration, it may be worth the investment. The key is to find a cost-effective banking solution that supports your business’s financial health.
Security and fraud protection: Safeguarding your business finances
As cyber threats and fraud increase, prioritizing security is essential for businesses when choosing a bank.
Fraud monitoring and alerts
Banks with robust security measures provide:
- Real-time fraud alerts for suspicious transactions
- Two-factor authentication for online banking access
- Secure encryption for online banking, such as SSL (Secure Socket Layer) or TSL (Transport Layer Security)
This protection helps prevent unauthorized access and safeguards your business’s hard-earned money, ensuring you can wire money online safely when needed.
Planning for growth: Selecting accounts that scale with your business
As your business expands, your banking needs will evolve. Choosing an account that can grow with you can save time and prevent the hassle of switching banks later.
Scalability features to look for:
- Higher transaction limits: Some accounts limit the number of free transactions per month. Choose one that supports your business growth.
- Integrated business service: To simplify your financial management, look for banks that offer payroll, invoicing, or merchant processing.
- Loan and credit options: Building a relationship with a bank that provides business credit cards or small business loans can be helpful if you ever need funding.
Understanding these differences, leveraging digital tools, and optimizing cash flow are key to financial stability and future growth. The right accounts don’t just store money; they empower smarter decisions and long-term success. Take the time to choose wisely and use them strategically to unlock your company’s full potential.
FAQs
Can I have a savings account with a business account?
Yes, you can open a business checking and savings account. A business checking account helps manage daily transactions, while a business savings account allows you to store excess funds and earn interest. Many banks offer both, making it easy to separate spending from savings.
Should a small business have a checking and savings account?
Yes, having both is recommended. A business checking account manages cash flow for daily expenses, while a savings account helps grow reserves for expansion, unexpected costs, or future investments. Separating funds also helps improve financial organization and planning.
Is it ok to have a personal and business account at the same bank?
Yes, you can have personal and business accounts at the same bank. However, keeping them separate helps maintain clear financial records, simplifies tax reporting, and prevents legal or financial issues.
Do I need a business checking account for an LLC?
Yes, if you have an LLC, it’s advisable to use a separate business checking account. This keeps your personal and business finances separate, helping maintain your LLC’s legal protection and liability benefits.
Is a business account savings or checking?
A business account can be either a checking or a savings account. A business checking account handles day-to-day transactions, and a business savings account acts as a fund reserve that accumulates interest. Both accounts serve different purposes within business financial management.
Can I open a savings account with a business name?
Yes, you can open a savings account under your business name. To do so, you’ll typically need to provide appropriate documentation, such as your legal business name, Employer Identification Number (EIN), and business registration details.