Choosing the Right Bank for Your Small Business
You’re thinking about starting a small business, or maybe you’re finalizing your plans to open up shop. Either way, one of the most important decisions you make regarding your new operation is which bank will handle your finances. While it will likely not be an easy choice to make, here are some tips to help along the way.
Understand What You Need
Unlike personal banking, organizing your business finances requires more than opening an account and finding the closest branch. Finding a bank that offers the services you need—at a reasonable price—can be more difficult than it seems. Before you start shopping for a bank, it is important to know that most financial institutions will require you to have a business name and be registered with the state before you can open an account. If you’ve crossed these items off your list, however, you’re still not out of the woods. You will need to have a good idea of what your business’ cash flow will be once you are up and running. Managing your business finances will likely require more than opening a checking account, and banks often have different balance requirements for businesses. So, do your research or check with a financial analyst before opening an account.
Just as with any number of other products or services, banks offer unique features to make their service more appealing to potential business clients. Before you jump at the first opportunity that looks appealing, take some time and shop around. Remember, the location of your bank should factor in, but shouldn’t make or break your decision. If one bank is a little bit further away, but charges lower fees on your accounts, it may be worth the extra time behind the wheel to keep you accounts with them. Speaking of fees—pay attention to them. It cannot be emphasized enough that fees charged to small businesses are much different than those assessed on personal accounts. Your business may be charged for online banking and associated penalties for overdrafts or other incidents can be much more severe. If you’re having trouble finding exactly the features you want or your business needs, just ask. Many business bankers are willing to work with prospective clients to determine unique needs and how to address them.
Think About the Future
You may not need to now, but at some point in the future do you think you will need to borrow money for your business? Depending on your industry, there may be equipment costs or other expenses you will need to cover. When it comes to your business’ finances, it’s better be safe than sorry. With this in mind, you need to be sure your bank has the means to offer you a sufficient loan, and smaller banks may not be able to. Also, your banking relationship isn’t set in stone. You should feel free to reevaluate your banking relationship and always keep an eye out for better options.