Best Small Business Bank Account
Small business owners are often looking for places where they can open a business checking account with little effort and get some benefits in the process. Now, the procedure that involves opening a startup bank account, especially for a business — small or large — can be tedious and time-consuming.
For a long time, the tendency was to pick one of the big banks for safety and security that comes with the brand’s reputation. And that is fair game.
But over a period of time, entrepreneurs have realized that these large banks levy very many regular charges and hidden charges. This is despite a few rebates from credit unions.
And they are constantly playing catch up with newer technology which makes easier and accessible options like online and mobile banking a bit cumbersome. This hardly ever works for personal banking let alone business transactions.
So, what should a small business owner do when they want to open a business bank account? For starters, you want to consider a banking platform that is entirely online. This can eliminate a lot of basic hassles right away. And there’s more. You will have all the answers and more by the time you are done reading this piece.
Why Small Businesses Need a Bank Account
Many small businesses start off with a personal account. But that can become overwhelming very quickly. That’s why it is important to separate bank accounts for your business transactions and personal ones. For that, you need to take a good look at your options and choose the one that suits your business needs.
Now, if you don’t have a lot of cash dealings, you want to get a business checking account with a platform that can help you go completely paperless.
Bank Novo, a banking platform founded in 2016, is one such option. If that is not the case, you can still go for a traditional choice like Bank of America, also an option we will analyze in this piece.
And then there is BlueVine that offers intuitive banking services. If the list of its features matches your preferences, a business checking account with them is something to consider.
We will look at each of these options at length to help you make your decision. But before that, it is important to know that the advantages and disadvantages of a checking account depend on the type of business.
For instance, a good business checking account:
● Gives you financial protection by keeping it separate from your personal transactions
● Makes tracking and handling business expenses easier and helps avoid overspending
● Make it easier to file your tax returns
● Makes your business look professional to your clients and customers
How to Choose the Best Small Business Bank Account
When you are looking at the options for the best banks for startups, you will realize that your requirements and priorities might not be the same as other entrepreneurs. So, you need to make sure that your choices work well for your business and yourself.
The process of finding that out starts with understanding your business and how you need your banking platform to make finances easier for you. You can do this in consultation with financial consultants, credit unions, banks or you could just keep reading.
Features and Services
In the beginning stages, you might want to think about opening a business account that makes purchasing easy. That means you need a business credit card account that also allows cash advances.
You also want to think of a line of credit that can be accessed as and when you need it. Sometimes, a business loan is also a requirement. Or at least, it is good to have the option.
If a bank provides you all of these features, you are looking at a good choice. And if you plan on accepting debit and credit cards from clients or customers, you also want merchant services. You can opt for a third-party processor for this because they tend to offer better rates, but it is efficient and convenient to tie it up with your bank.
Interest Rates
If you want to get a business savings account or a checking account with interest-bearing, you must look at the rates. This comes in very handy when the annual percentage yield starts to fall. You need a bank account that offers the best rate so that your money can multiply with ease.
You also need to balance that interest on the deposit account against the various fees you are likely to pay.
Service Fees and Hidden Charges
Speaking of fees, there will be many of those like maintenance fees, transaction fees, ATM fees and more. Some banking platforms waive these charges if you meet the minimum balance requirement on a monthly basis.
Some keep them low in order to be friendly to small businesses. You might want to check out if the bank of your choice is giving you any of these breaks.
The transaction fee is another one to watch out for. This is levied if you do more than a designated number of transactions per month. You may also have to pay an early termination fee if you decide to close the account. So, it is important to make the right choice in the beginning.
Withdrawals from other ATMs are also something to think about. This is a flat fee and is often levied when you exceed the number of transactions or amount of cash.
Introductory Offers
A lot of banks now give promotional offers to entrepreneurs to encourage them to open a business account with the bank. Some of these are in the form of cash if you maintain a certain level of balance or make a good initial deposit.
So, if the features of the business account match your priorities, you must check out the perks they offer before you open the account.
Online and Mobile Banking
We live in a digital world and going to the bank is not always an option. Gone are the days of looking at passbooks and checkbooks to tally the account. And these are not luxuries.
The bank of your choice should have a good mobile app and a dynamic website that is easy to navigate so that you can check your balance and make transfers with ease. It also helps pay bills and makes everyday life convenient.
Ease of Technological Integration
Speaking of online and mobile banking, a lot of banks are now using software to integrate their services with other financial platforms to make business transactions easier for freelancers and small businesses.
But the integration does not go well if the bank is not technically sound. So, you want to make sure that not only do they have multiple integrations but that the technology makes every transaction seamless. This makes important essential tasks like payroll and tax management much easier.
Our Recommendations for Your Business Account
You now know why you need to have a separate business account and what you should look for when picking the banking platform of your choice. Here’s a look at three options that are either popular and innovative in their attempt to make banking easy for entrepreneurs.
Bank Novo — For Freelancers and Small Businesses
Bank Novo is actually not a bank but a banking platform that was founded in 2016. But it is partnered with the Middlesex Federal Savings which insures your account up to $250,000 in case you are worried about bank failure.
Next, this banking platform is all about making things easier for small businesses. So it only offers a business checking account so you won’t be spoiled or confused for choice.
All you need is $50 to open the account and then you don’t even have to worry about minimum balance requirements because there are none. It is quite easy to open an account and it takes only about 10 minutes.
You just need to submit an application with your IDs and business credentials. You have to be 18 years of age, a permanent resident or a US citizen with a business based in the country and have a valid phone number and mailing address in the US.
The fee schedule of Bank Novo is very transparent which means you don’t have to worry about hidden charges. You will only be charged for the return of uncollected funds and insufficient funds and the fee is only $27.
There are plenty of services like free transfers, a debit card, incoming domestic and international wires, etc. And best of all, you can use any ATM anywhere without being charged. If the ATM does deduct any money, you will be refunded at the end of the month.
They also work with many other financial institutions like Slack, Zapier, Xero, QuickBooks, etc. to make transactions easier on your business. And there are plenty of offers available on purchases with some of these partners.
Pros
● Does not need minimum balance or charge a maintenance fee
● No transaction fees on ACH or incoming wires
● Does not charge an ATM fee
● Has features like invoicing and bill payments with online banking
● Well integrated with tools such as Shopify, Xero, Stripe, etc.
Cons
● Does not provide some traditional banking features like cash deposit
● Domestic and foreign wires are possible only through integrated tools
● Bill payment cannot be made recurring
Bank of America — For Large Businesses
Bank of America is popularly known to be one of the big four in the banking sector. It has three different checking account options and each of them has separate requirements.
Most people opt for the Core Checking Account for which you will need $25 to open the account. There’s a monthly fee of $12 and a waiver if you maintain a daily balance of $1,500 or a direct deposit of $250. There is also a daily limit on the ATM and a fee if you use one out of the network.
The interest checking account asks for a higher minimum fee, monthly fee and the waiver needs a lot more daily balance. It also has a non-network ATM fee.
And finally, the Bank of America SafeBalance Banking account. It has a minimum fee to open the account and a monthly fee for maintenance. There is no waiver for this account but there is an ATM charge for out-of-network ATM machines.
But all the charges are pretty standard for most traditional banks. It is what you get for the security that comes with the brand. So, this is a good option for large businesses that might want an extended line of credit or a huge loan.
BoA also has a lot of branches and ATMs with good online and mobile banking services. But its competitors also offer the same.
Pros
● Many ATMs and local branches
● One-stop-shop for loans, deposits and credit cards
● Daily limit on ATM card purchases is higher than usual
Cons
● Lots of different fees for the services
● Requires a minimum balance
● Does not have integrations like its online-only counterparts
BlueVine — For a Traditional Business Account
BlueVine is a good choice for a business checking account which is also pretty easy to set up. They work quite a bit like Novo which means they are friendly to businesses and don’t have fees for maintenance, incoming wires, minimum deposit or balance or insufficient funds.
They do, however, charge for outgoing wires and there is an ATM fee if you go outside their network.
This one is also closer to traditional banking practices, which means you will get a checkbook with the account and they pay an interest of 1 percent for a balance up to $100,000.
Pros
● Two free checkbooks which are useful for some businesses
● Easy to open an account in the sense it takes only a minute
● Can earn interest on bank balance
Cons
● Charges ATM fee if you are not in the network
● No cash back on the debit card
● In some territories within the US it is completely unavailable
Bank Novo vs Bank of America
When you compare an online-only banking platform with a traditional large-scale bank like Bank of America, you would usually expect the titan of industry to win, smashing through the competition like The Hulk.
If that’s what you expected, a one-side show, you are in for a big surprise. As mentioned in the beginning, the choice of a business checking account depends on the type of business you run. So, if you run a small business and want to keep it entirely cashless, our findings indicate that BoA isn’t necessarily your best bet.
● Bank Novo is entirely online and its tech game is up there while BoA offers the standard online and mobile banking options as the rest of the big four, which aren’t exactly leading in this section.
● Novo has no hidden charges or fees for services while the ones BoA levies can be counted on both hands.
● Novo offers a lot of integrations with other financial institutions that you might already be tied up with. This makes the transition from a personal to a checking account very smooth, while BoA offers no such integrations.
Bank Novo vs BlueVine
These two options can be considered the alternative to your traditional choices, like the Bank of America. But even so, Bank Novo comes out as a clear winner.
● Bank Novo offers free ATM services anywhere in the country and sometimes outside too. In comparison, BlueVine is free only for in-network ATMs.
● Novo allows you to go entirely paperless and offers comprehensive features on its website and apps. BlueVine still lets you carry checkbooks which, while useful, is not for all types of businesses.
● Novo has no branches anywhere in the country which makes them very attentive to their customers online. BlueVine tries to walk that fine line between online and physical presence and is entirely unavailable in some parts of the US.
Bank of America vs BlueVine
Finally, the test of which is the better option comes down to the last combination in this list of comparisons.
● The fundamental difference between BoA and BlueVine is that the former is as traditional as it gets while BlueVine is sort of a mix of BoA and Bank Novo.
● BoA levies a lot of fees and charges while BlueVine limits itself to ATM fees and outgoing wire transfers.
● BoA gives you a lot of interest on the bank balance. BlueVine does too but it cannot compete with BoA.
Why Choose Bank Novo
This is a great choice for those who want to keep their business account dealings entirely online. There is no reason to go to the bank anymore if everything is done and done delightfully well online.
That’s why Bank Novo is a good option for small businesses and e-commerce operations that are mostly, if not entirely, paperless. This banking platform is also very friendly to businesses with its tech integrations.
So, if you have been managing with a personal account and a few digital payment systems, transitioning into Bank Novo is a piece of cake. And you can continue using those apps which make payments and money transfers rather easy.
Why Choose Bank of America
If you are a large business that requires a lot more security than the insurance of about $250,000 that Bank Novo can give, Bank of America is your choice. It is a popular name and is trustworthy too.
Just remember that from the moment you decide to open the account to maintaining it on a daily, weekly and monthly basis, you will need to constantly check on it to make sure that you are not getting charged either for using some service or not maintaining a minimum balance.
Why Choose BlueVine
If you cannot make up your mind between the big and popular Bank of America and the new but innovative Bank Novo, BlueVine is the option you are left with. It tries to balance the services of traditional banking while providing at least some of the features of the online-only competition. That approach comes with a few drawbacks and you will have to live with them if you pick this platform.
Frequently Asked Questions
Q: Which Bank Owns Bank Novo?
A: Bank Novo is a banking platform that is not owned by any bank. But it has Middlesex Federal Savings Bank as its partner which makes sure that your account will be insured up to $250,000.
Q: How to Do a Cash Deposit If I Have an Account with Bank Novo?
A: You cannot do a traditional deposit but you can buy a money order and deposit it at any ATM and get it into your account through the mobile check deposit feature.
Q: Does Bank Novo Check My Credit?
A: no, the banking platform does not do a check on your credit history when you apply for a business checking account. And the dealings of this account will not have any impact on your credit score.
Customer Testimonials
A customer of Bank Novo said, “NOVO is the best solution for all busy people. Fast, easy and simple way to have your business save money.”
Another customer of Bank Novo said, “Great customer service and extremely easy to start up.”
But a customer of Bank of America said, “High unnecessary fees. Long hold times. Never able to help with the situation. Thank god for chime. These old school banks need to stop robbing us from our money.”
Another one said, “I have been left on hold for a customer service representative for over 50 minutes. All the branches in my area are closed so you can only use ATM machines.”
A customer of BlueVine said, “I can’t get a hold of anyone. Need assistance!!!”
And another said, “I have tried to talk to someone for the last 2 days about something incorrect on my tax forms and they take my info but never call back!”
Summary
In this piece, we have looked at three different options. And these specific banking choices have been selected by our team to make sure that every small business owner gets a good view of the types of accounts at their service.
So, there is Bank of America which never needed an introduction. There is BlueVine which is the middle of the road when it comes to balancing traditional practices and innovative features for a checking account.
Finally, there is Bank Novo which despite its name is not a bank but an independent banking platform that has partnered with a bank. And even though that sounds suspect, it has some of the best offers a platform can make for certain types of small businesses that might thrive if they go completely cashless.
In fact, in a one-on-one race of the features, Novo can even take down Bank of America. And that is possible because of their transparency, availability for the customer and integration with tech services that are already being used by entrepreneurs.
