The rules for business bank accounts and personal bank accounts can be very different. Here are some things to look out for to avoid paying extra fees and other suggestions to stay in good standing with your financial institution.
1. Read the fine print
Look, we’ve all scrolled past the terms and conditions. But you can’t treat your business bank account like you treat the cookies on some random website. Often hidden fees and additional charges can be buried in the small print for customers using business banks. Actually reading the terms and conditions before signing up for a business bank account allows you to make sure that the account is right for you.
Understanding what a bank offers and where you might get hit with extra fees also allows you to shop around for a business bank that best suits your needs and -- ideally -- keeps fees upfront and low cost.
2. Use an online bank
Online banks have a lower overhead than traditional financial institutions. Because of that, they are often able to offer lower rates for business banking than some of the more well-known brands. Online banking also has a number of other advantages: you can access your information 24/7, utilize a host of features to help keep track of your finances, and do your banking from anywhere you’ve got a phone.
3. Only use your bank’s ATMs
Using ATMs that aren’t affiliated with your bank gets you hit up for additional charges. Often those fees are double: taking out money can lead to a fee both from your bank and the ATM that you’re using. If you have to get money out at an ATM that isn’t affiliated with your bank, we recommend taking out a large one-time sum if it’s possible. That way you’re not incurring additional fees for each smaller withdrawal.
4. Avoid Overdrafts
As a small business, being aware of your cashflow -- the money coming in and out of your accounts each month -- is crucial for your business to be a success. When you aren’t aware of how much money you’re taking out of your account, it’s easy to slip into overdraft. Banks pulled in over 30 billion dollars in overdraft fees last year.
It’s a huge source of income for the institutions. But incurring fees for taking out money that you don’t have can be a huge problem. The average overdraft fee comes in at over thirty dollars. Those fees can add up quickly. Knowing how much money is in your account is the easiest way to avoid overdraft fees. It is often better to put expenses on a credit card that you can pay off towards the end of the month than take the hit for an overdraft.
5. Know monthly limits and pay attention to them
A lot of banks put a limit on the number of free transactions you’re able to make a month with your account. This may be things like withdrawals from ATMs, debit payments, and transferring money between accounts.
When you exceed the number of free transactions allotted, the banks start hitting you with fees that can quickly add up. Especially if your business is busy that month. Knowing monthly limits can be a great way to save some additional cash. But even better than that is finding affordable business banking that doesn’t impose those kinds of limitations on your banking.
6. Know your minimum balances (or get a bank that doesn’t need a minimum balance)
If you keep a minimum balance in your account many small businesses will waive fees associated with business banking. It is an incentive to be a less risky customer for the bank.
If you’re the type of person who doesn’t like monitoring your account on the regular, you can instruct many banks to send you notifications via email or text message when your account is approaching lower limits. But there are also many great business bank options out there that offer low-cost options without a minimum balance.
Taking control of the finances for your business and avoiding fees can be a lot of effort. If you’re looking for a business banking solution to take the guesswork out of managing your finances you’ll want to sign up with NorthOne. They’ve got everything you need in a business bank account at just ten dollars a month.
Graham Isador is a writer in Toronto. His work has appeared at GQ, VICE, and Men’s Health, among other places. @presgang