Business Article - Business Banking Advice
Business banking is an exclusive collection of account types meant solely for business transactions, and the first necessity to corporate owners both large and small, offering incentives and options unavailable to regular account holders. Taking the time to choose the right bank is vital, as it will be a large part of your business. You will rely on them to complete your transactions and properly handle your money. Choosing a bank without much consideration could land you in a position of poor customer service, incorrect transactions, and service fees.
Becoming a business account holder is a simple process for all qualified business applicants. The requirements for obtaining a business account are different at each bank, and vary by the date opened and incentives desired. Some banks offer special programs throughout the year, and may result in greatly reduced startup costs.
Determining the immediate necessities of your business is the first key when approaching banks. If your business is small and you simply need the ability to issue checks and add/remove funds, then choose a bank on those qualities only. Do not worry about max interest rates and bonuses to start with. Also, decide which conveniences you absolutely must have and make a list of the banks that offer those incentives.
However, if you are an established business and already have an account, the reasons for leaving your other bank likely relate to service or interest. If customer service was an issue, try to contact current business owners using the bank you are considering. Ask them about their experience, and about the general customer care of that bank.
If interest was the issue, make a list of banks offering better interest than your current. Also, ask if they offer increased incentives for having a long record of good account history. Certain banks may consider offering a higher interest rate based on previous records, good credit, the business status, or if you are planning on placing a large sum of money into a long term savings account.
When considering a bank it's important to realize that there are certain conveniences that have become standard in the banking business. For example, Internet account access has become popular in the past few years, offering the account holder the ability to log onto their business account and view the current balance, latest transactions, the last statement issued, fines and penalties, etc. Such standard offerings should be expected from any bank. If your prospective bank does not offer free or unlimited Internet account access, consider another.
Other common incentives include: a debit/withdraw card, 24 hour banking services, overdraft protection, limited number of free checks, 24 hour customer service, and late fee forgiveness. Deciding which services you must have will narrow your search and make the decision process easier and less time consuming.
Many look towards their personal bank when considering a business account. Your personal bank will likely offer business banking accounts, and if you have a personal account with them in good standing, they will be more than eager to offer you a business account. However, using your personal bank for business may not be ideal. Business accounts and personal accounts vary greatly, and while your bank may be satisfactory for personal banking, it may be lacking in business offerings.
Compare at least three banks. Search their website for business specific incentives such as a dedicated small business team. Call and ask to speak with a business banking representative. The representative should be able to answer any questions you have regarding their accounts, including information on fees, transactions, and customer service.
Once you have decided on a bank, making an appointment to open an account will be needed. Knowing which business account type you are interested in will speed up the application process. However, if you are uncertain of which business option at that bank is best for you, bring a list of questions and ask the bankers opinion.
There are several different kinds of business accounts available. The one you choose will be directly related to your financial needs.
- Instant Access Account: for funds that will be accessed at any time.
- Term Deposit Account: for funds that will not be accessed for a long amount of time.
- Currency Deposit Account: for funds that will be deposited and accessed on a daily basis.
- Foreign Currency Account: for funds deposited in a currency different than the native one.
- Merchant Account: for funds that are deposited via debit and credit card transactions.
No matter the type of business account chosen, appropriate documentation will be required to open a business account. Proof of business ownership will be required before the application process is started. The documentation needed may vary per bank, but there are certain requirements that are standard and should be brought automatically.
The documentation brought will vary slightly depending on the type of business you have. There are several different types of businesses, with sole proprietor and limited liability companies (LLC) being the most common.
A sole proprietor with need to open a business account in their own name with a 'trading as' name associated. For example, the account name will be filed as 'your Name T/A Business Name'. A limited liability company, on the other hand, will be able to list the name of the company as the account name. Limited liability companies are required to be filed and registered before approaching the prospective bank.
The most common documentation a bank requests are the following:
- A business plan detailing the current or prospective business.
- A description of the businesses function and purpose.
- Proof of any partnerships within your business.
- Details of startup finance origination.
- Any information (credit score, account history, etc) from a current existing business account if you have one.
In addition to the business documentation required, you will also be required to bring personal documentation, including but not limited to:
- Drivers license (and social security card if the number is not present on your license), and a utility bill to confirm your address.
- An 'account opening mandate' provided by the bank.
- The names and signatures of every person who is allowed to sign onto the bank account, along with a copy of each person's signature.
If you have all the appropriate documentation, the banker will give you the correct applications to fill out. Once the account is started, you will be given a few documents, including a brochure or similar relating to the specific business account you opened. You should also be given a terms of service and a list of fees and penalties. Mark on these documents which account they pertain to, and then file it in a safe location. Should an issue arise, you will have the terms of service to consult.
Maintaining a business account properly is just as necessary as researching a bank before applying. Proper records will not only prevent you from overdrawing the account, but will also protect you should the bank make a mistake on your statement or with your funds.
Keep records of all transactions, withdraws, and deposits. File each statement mailed or, if you prefer electronic notifications, print each statement as it becomes available. Regularly compare your transaction records to the printed statement. Catching mistakes early is the key to getting them corrected.
If any issues regarding the bank arise, be sure to contact them as soon as possible. Waiting to contact your account manager could lead to a multitude of problems, including late fees, increased problems from the first mistake, and a bad record with the bank, making them uncooperative for future loans or fee forgiveness.
Finally, know your limitations. There are more ways to get a fee than not, and not reading the fine print on your account could leave you with surprises on your next statement. Read more than the brochure or general info sheet given to you on your first arrival. These items will only list the basic fees and requirements, not the lesser fees.
Business banking is a wonderful option for any company. Finding the correct bank may be time consuming, but it will pay off in the end. Determining your own needs before deciding on the type of business account needed will make the entire process easier. Ask any questions you may have, and then meet with a representative. If you are satisfied, make and appointed and bring the appropriate documentation. Once you fill out the application, make your first deposit. Once these steps have been completed, simply keep track of your transactions and keep appropriate records to make your banking experience pleasant.