Small businesses owners are more likely to be audited than non-business owners because the IRS knows that accounting and tax matters typically fall by the wayside when operating a small business. One of the first things you need to do when starting your business is to open a separate checking account, and make certain you keep your personal and business transactions separate.
If you have registered your business as an LLC, or any other type of Corporation or Partnership, banks will require you to specifically open a business checking account. On the other hand, if you operate as a sole proprietor/freelancer, you may be able to get away with simply opening up a second personal checking account through your current bank.
When you begin to search for a business checking account, you will find that there aren’t many free checking accounts like you would find for a personal checking account. This is when you may have to consider a smaller bank for your business checking needs to avoid the many fees involved with business checking.
I found BBVA Compass to be the best option for me. It’s not as large as Chase or Bank of America, but it has several branches across the southern states, as well as the west coast. Here are a few reasons why I chose the BBVA Compass ClearConnect for Business account:
Because BBVA Compass may not be available in your area, your overall focus should be finding a bank with no monthly maintenance fee and no minimum account balance requirements. I would say go this route even if you can meet the minimum account balances for business checking accounts at the larger banks – why let the bank make money off your required minimum balance of $1,500 plus?
Lastly, as your business grows DO NOT FORGET to reevaluate your business checking needs. You may see an increase in monthly transactions as you grow, or the amount of cash deposited. If you find yourself exceeding the transaction/deposit limits and being charged individual transaction fees, visit your local bank to upgrade your account type. Keep in mind, the bank may not initiate the account upgrade conversation because they want those transaction fees from you – so it’s your responsibility to do so.
If you live in the Dallas-Fort Worth area, below are a list of smaller banks in the area with reasonable bank fees for small business checking. Although, I went with BBVA Compass, all of these were strong contenders when I searched for a business checking account.
NOTE: The reference to the Chase and Bank of America account requirements are for their basic small business checking accounts.
Please feel free to leave any other cost saving tips for selecting a business checking account in the comments for other small business owners to consider.
I am a personal and small business finance enthusiast with a deep interest in making people's lives a little easier with financial tips and advice.